This is Cobalt Barbinagree and you're listening to Switched on the podcast brought to you by bloomberg Enif heavy industry faces one of the toughest paths to net zero, yet decarbonization activity is picking up across major markets.

New commitments reached almost fifteen billion dollars in the middle of twenty twenty five, but progress is uneven and policy is playing an outsized role in determining who advances and who falls behind.

In the US, funding cuts have slowed momentum.

The government has clawed back three billion dollars from the Industrial Demonstrations program, and several hydrogen hubs have lost major support.

Meanwhile, Europe, Australia and parts of Asia are pushing ahead from the EU's carbon border Adjustment mechanism to new national retrofit funds and expanding industrial carbon markets in China, India and Vietnam.

At the same time, investment is concentrating heavily on steel, with ninety four percent of industrial decarbonization spending in the second and third quarters of twenty twenty five flowing into electric arc furnace projects and early hydrogen ready steel pathways.

Other sectors are testing recycled and buyer based feedstocks, electrified heat, and new financing approaches designed to bring early projects to market.

But with progress accelerating in some regions and stalling in others, is heavy industry finally turning a corner on its decarbonization path.

On today's show, I'm joined by Alan tom Abraham, BNF's head of Sustainable Materials, to walk through his team's note industrial decarbonization market outlook for the second half of twenty twenty five.

BNF clients can find this, along with other sustainable materials research, by heading to BNF go on the Bloomberg terminal or visiting BNF dot com to learn more about how BNF approaches strategic research on the energy transition, including developments in commodity markets, sector trends, and the technologies shaping the future.

You can find more information at BNF dot com.

So let's dive in and explore how industrial decarbonization is shifting in twenty twenty five.

Alan, welcome to the show.

Thank you Cobert, and it's a pleasure to be here, and let's talk about industrial decarganization.

Yes, so, how has the year gone for the world of industry?

On their journey to decarbonize.

It's been a bit of sweet year.

There's been some places where we've seen things move forward, there's been some places where I've seen things not move as quickly as we hope.

But overall, if you have just to look at numbers, this year, we are almost seeing investments bounce back from what we saw a year back.

So twenty twenty four was one year where in industrial investments actually started to show a major decline compared to twenty twenty three.

But when we look at the investments for the first nine months of twenty twenty five, we are starting to see that the investment levels have equalled the total that we saw in the whole of twenty twenty four.

So that's promising.

So it means that we are starting to see companies cut out the noise on all the negativity that's happening with respect to progress and emissions commitments, et cetera, and actually committing investments towards industrial decarbonization projects.

So how much was it.

I think we've tracked about twenty two billion dollars overall being committed for clean industrial projects in the first nine months of twenty twenty five, and that's almost as comparable to the investments that we've tracked for the whole year of twenty twenty four.

So that's an optimistic signal.

It looks like when we publish our figures for total investment in the energy transition early next year, it sounds like the industry sector will be up on the prior year.

So that's good news.

And as ever, I mean, this part of the economy is particularly reliant on policy, with most of these technologies being really quite expensive, high carbon prices, very substantial green premiums.

What has the policy environment been like?

What are the big shifts that have occurred in twenty twenty five.

Yeah, policy is being where we've seen the most back and forth when it comes to momentum.

In the last one year.

To start off the year, we had a big change in administration in the US, which also came with a lot of headwinds for several clean industry projects.

As the Trump administration started reviewing some of the programs that the previous administrations have put forward and started reviewing the funding under some of these programs.

A lot of the clean industrial projects that one funding through grants or other incentives started facing issues with respect to Grand cancelations or sometimes the infrastructure around which some of these technologies were to be deployed were also pulled back in terms of support.

So the biggest one therefore is the change in direction in the US policy environment towards decombonization investments.

And in May, the US Department of Energy canceled close to three point eight billion dollars in grants for industrial decarbonization and carbon capture projects, of which about three billion dollars was from the Industrial Demonstrations Program.

And that program is especially important because it was one of the biggest programs six billion dollars in overall total allocation for first of a kind industrial decarbonization projects and looking at technologies like hydrogen, carbon capture, electrification, a mix of all of these, and about three billion dollars out of that total six billion dollars was cut.

It effected first of a kind projects in the cement industry, in the chemicals industry, glass sectors, so a bunch of different initial projects were now faced with no funding from the government as a result, which has resulted in also some of these projects not moving forward.

So has the landscape in the US just sort of ground to a halt as a pipeline of industry decombonization projects just dried.

Up at this moment.

We have to say, yes, there are still some projects in some pockets which have the right combination of a customer that is willing to pay a premium versus a technology that is not that expensive as some of the first of a kind technologies.

So you have certain projects like these cycling, for example, in the aluminum industry, where the emissions benefits are real clear, the economic benefits are also there, which means some of these projects still move ahead.

But for first of all kind projects in the US using technologies like carbon capture and hydrogen, it's definitely come to a hard Yeah.

So the US particularly challenging this year, not unexpected considering the change in posture of the Trump administration.

Where else has had a tough year and where have there been bright spots on the policy front.

In terms of a tough year.

It's still too early to say, but there have been some uncertainty around how quickly decognization investments in Canada again North American market, especially because there is a new government that's coming in.

They're trying to think about new ways to help industries invest in these decogonization solutions and also stay competitive.

So that discussion is still going on and there's a little bit of uncertainty on some of these projects, but there are certainly big bright spots that we saw and that comes down to Europe and AHAs we titled the report Advances in Europe.

In February, the European Commission actually came out with the Clean Industrial Deal, which is Europe's attempt to ensure European industry stays competitive while it's recognizing.

So it's about one hundred billion euros that the EU is planning to divert into clean industry and clean tech manufacturing projects over the next ten or fifteen to twenty years.

So that's a massive amount of funding that we've tracked in Europe during this period.

We're also starting to see a lot of momentum in Australia.

We've tracked about five billion dollars US dollars in new initiatives that were announced in Australia in just this year, and that's again huge amount of money that the government is trying to support industrial projects steel aluminum, as well as broader you know, green iron and other manufacturing ambitions within Australia.

Beyond the one hundred billion euro incentives that I mentioned that are also specific countries that are coming up with their own incentives.

In Europe, Germany, for example, has come up with their own program to support industrial deg organization through a carbon contracts with difference system.

Close to five to six billion dollars in new allocations the government and the European Union Commission has approved for this program.

It's again a very impactful program trying to think about how to decarbnize industries by giving long term financial support and not just upfront subsidies to some of these projects.

So very innovative mechanism to help some of these projects take off the ground.

And finally, I would say there's also some very green spots when it comes to carbon market policies, especially in Asia.

We have China, the largest editor from an industrial point of view, trying to think about including industrial sectors like steel, cement and aluminum within the national carbon market there and increasing their exposure to the carbon prices within the market.

We also have initial steps from markets like India, Vietnam, Japan, all looking to bring industrial sectors within the carbon markets.

The carbon markets in all of these regions are all in very early stages, so that it still needs a lot of time for carbon prices to be meaningful to kickstart a lot of decobonization initiatives, But it's a good first step to see that these governments are starting to bring industrial sectors within the carbon markets in these regions.

So it paves the way for future carbon pricing which could be bit levels high enough to incentivize actual decombonization.

So these carbon prices increasing, I mean the European Union has a carbon price now over one hundred US dollars a time, pretty substantial price signal?

Is that incentivizing European industry to decarbonize and to push forward with some of these heavy industry decarbinization projects.

Why do they need another hundred billion dollar fund to do so?

At this point?

Even though the emissions trading system carbon prices are reaching the levels that you just mentioned, a lot of the industrial emissions receive a lot of free allocation of emission sallences, which means they're not exposed to the carbon prices even though the carbon prices have that high and as a result, a lot of the initial investment that is currently being made into industrial decorganization projects is driven by supportive incentives that the European governments have put in but as carbon prices are expected to go out, because the European Union wants to face out these free allocation of emissions elevances by around twenty thirty four or twenty thirty five and align it with the carbon border regusment mechanism, the SEABAM system that the European Union is trying to install into the European ecosystem.

So with that progressing, companies are looking at a full exposure to the carbon prices by around twenty thirty five, and carbon prices are expected to also significantly increase those two hundred and eighty euros per tonue of C two as per vnears thinking by twenty thirty five, which means that's also one of the reasons why companies want to invest today so that they're prepared as carbon prices ramp up by around twenty thirty five.

And there's also a lot of incentives that governments are offering for these companies to invest in these green technologies.

And with all of these new funding mechanisms being put into how much should our audience look at that as a signal of confidence when there's been a pretty patchy track record a lot of these projects having been awarded funding and then ending up either not meeting the conditions or having to revoke the funding because they're canceling the projects.

So how much of a signal can we really take from this?

Yeah, and that's a very good question.

I think with all these innovative projects in the initial days, there's going to be a mix of projects that move forward and a mix of projects that eventually realize the economic stone pencil out, and that's just going to happen.

Some of these projects would definitely end up in a place where when you think about the infrastructure that is required for many of these technologies, Like if you're building a hydrogen project, you need a hydrogen pipeline and the electoralizer system and all of the other associated infrastructure, and same is the case with carbon capture, for example, you need to have the carbon dioxide pipelines and the storage and the networks associated with it.

So it's a combination of infrastructure and the facilities that are using or switching to these technologies that needs to transition at the same time, and that becomes a complex transition so you will end up seeing some places where the infrastructure is not catching up to the ambitions of some of the projects when it comes to their process transitions, and in other cases you might also see where the individual companies don't find the economic incentives to invest in these technologies because the infrastructure is also not ready.

So it's going to be a balancing act.

But it still shows the momentum.

And these are all actual commitments that are usually awarded, which means it's available, but we have to prepare for the fact that some of these projects might still drop off as it comes closer to completion.

So in twenty twenty five, where has the investment been flowing.

What are the sectors which have received the most money and had the most momentum this year.

So in twenty twenty five, i previously mentioned it's about twenty two billion dollars that we've tracked for clean industrial projects.

Eighty percent of that funding has gone into the iron and steel industry, and majority of that funding has gone into building ELECTRICOC furnaces.

So ELECTRICOC furnaces is a fairly mature technology, largely used to recycle steel, and it's been used for decades.

It's a significant chunk of global steel production, close to thirty percent of global steel production today.

So because it's mature, it's largely economic.

When it comes to thinking about it as a low emissions pathway to produce steel, it is the cheapest pathway today to produce low emission steel, and it's technologically mature.

A lot of the investments are being directed towards that.

Within the iron steel industry, you're also seeing some hydrogen ready or hydrogen based furnaces being built, but those are early stage, but there is some investment that's also flowing into into that technology for the iron steel industry.

There again, the split is closed to seventy percent for electricoc furnaces and close to thirty percent for hydrogen based furnaces.

In this last nine months.

Outside of high and steel, it's roughly equally split between the cement industry, the chemicals industry, aluminum industry, as well as circular economy investments which includes recycling of plastics or the use of bioplastics for example.

Great so let's dive in sector bisector actually to tease that out a bit more so on and steel sector.

I'm just looking at one of the colorful charts in this report a lovely sort of pie chart which shows, as you mentioned, electric arc furnaces eafs attracting the most funding and project developments in the last year, and then direct reduction coupled with an electric arc furnace.

Now, how much of that direct reduction is natural gas fuel versus hydrogen fueld?

Today there are very few projects.

The Stegra project that is being built in Sweden is probably the only major project that is trying to use clean hydrogen from day one of its operation.

Almost all of the other direct reduction projects that are being built for steel are initially planning to use natural gas as the fuel and the reducing agent in the in the process, and then all of them eventually plan to switch to green hydrogen or other clean hydrogen sources when it becomes available at an affordable price, and affordability becomes the biggest determinant of when hydrogen starts to play a role within that direct reduction reaction.

But there are still benefits of using natural gas because on an average emissions perspective, direct reduction using natural gas as a fuel in feedstock is still able to reduce emissions by close to forty fifty percent compared to a blast furnace.

So there's a huge amount of emissions benefits still if we start building electricalc furnaces and direct reduction furnaces compared to glast furnaces.

And I mean, you know, there's really significant questions now around the future viability of hydrogen, you know, around whether the industry really will be able to scale up to provide feed stock fuel at the quantities.

And of course the price required for usage in heavy industry processes has that affected the plans of steel makers.

They still seem to be putting pretty substantial bets on hydrogen in the direct reduction processes.

Have we seen a bit of a shift more towards carbon capture and storage or other roots in the steel industry or do they still have confidence that hydrogen it's going to happen and deliver.

We haven't seen a huge shift towards carbon capture or other electrification solutions just yet, but there has also been a little bit of a slowdown when it comes to the push on hydrogen.

A lot of companies, I can take a couple of examples, For example, Asilomital in Europe had huge ambitions of using hydrogen and direct reduction in order to produce steel.

But what the company is now trying to do is build the electricalc furnaces that were planned as part of many of these projects.

For example in Spain.

In France, you had a lot of integrated direct reduction and electricog furnaces that were being proposed by as Limito.

Now the company has decided to just build the electricog furnace first and then hold off on the investments into the direct reduction furnace until they have a visibility of when hydrogen prices or other natural gas prices for example, will make it viable to make that investment.

So we haven't seen companies entirely changed technology priorities at this point.

We haven't seen a huge shift towards CCS, we haven't seen a huge shift towards other emerging technologies.

But we are still seeing some initial signs of companies slowing down on the hydrogen part of it until they have more visibility on where hydrogen prices land.

And that feels like that will probably take quite a few years to resolve.

So where else, what are the geographies I'm making progress in the green steel space.

Yeah, this is where both Asia and the Middle East would start to play even when I mentioned some of the hydrogen based projects within Europa facing some of the these delays and also decisions where they've delayed some of the hydrogen based investments.

We are starting to see some initial pilot projects demonstration projects coming up in China by large steel producers like Boo Steel and Steel, et cetera, who are trialing the use of hydrogen in their own furnaces and technologies in order to understand the technology better and also come up with large projects.

They're not yet large commercial scale projects, but they're on the pathway to do that if they have the right circumstances.

We're also starting to see momentum build in some of the other AS markets, like Japan.

For example, just this year, we've had Nippon Steel and Jfee Steel announced massive ELECTRICCOC furness projects in Japan, and the investments that they've they've allocated for these projects runs into many billion dollars.

For example, Nippon Steel has allocated close to four point four billion dollars for one of the new ELECTRICCARC furnaces that they're building in their q Shue works, and you also have Jfee Steel announcing close to two point two billion dollars for another electric ARC furnace that they're building, so massive investments that's flowing into Japan and the ELECTRICALG furnaces that these companies are building there.

We also had good signs from Vietnam, for example, where companies like Schwantian Group have announced again close to three point seven three point eight billion dollars to develop a direct reduction and ELECTRICOG furnace integrated project and also ELECTRICALC furness projects separately.

So again some momentum there.

And in the Middle East, some of the largest direct reduction plans that were proposed over the last few years have now started awarding their EPC contracts, their construction contacts and equipment supply contracts to the various technology providers.

Again, a lot of these projects are probably not going to use hydrogen from day one, They're going to rely on natural gas, but they're all building these projects and that's all positive signs that you're seeing.

When it comes to momentum outside of.

Europe, and how is the demand side shaping out?

Yeah, demand is always the tricky question.

We've been tracking an increase in the number of agreements that companies have signed for off taking clean steel or low emission steel.

At the end of July, we've talked about one hundred and ninety one different deals or contracts that companies have signed to buy low emission steal.

But the challenge here is only about a third of that is actually binding contracts.

That's still better than like some of the other sectors for example, like you know hydrogen, but you know a third of the deals is the only one we can have some level of certainty of these deals going ahead.

And the remaining two thirds are often letters of intent or memorandums of understanding, which then needs to be developed into more firm contracts over the next five or ten years.

Right, So they're much more speculative then.

Yes, and also depends on the maturity.

A lot of these letters of intent and memorandums of understanding, for example, are initial steps where they're evaluating when these g in steel projects will come online, and when they have more certainty on these g in steel projects coming online, it then converts into more firm contracts.

And so what's motivating the off take is that are signing binding contracts.

Are there particular sectors or applications where this is where where the demand is being supported by customers, by end customers who were actually, you know, the products that are being made or how are the stars aligning there?

Yeah, At this point, a lot of the binding contracts are being signed by automakers with very serious and string and sustainability goals.

So automakers are increasingly looking at their Score three emissions as part of their fuel related emissions as well as their electric vehicle transition strategy.

And when you look at your Scope three emissions, the emissions embitted in the steel and the aluminum that you use when you manufacture vehicles becomes a significant part of your overall emissions.

And it's those companies that have very strict Score three emissions reduction goals that are first signing these binding offtake eglements.

And often for many of these automakers, the increase in price from the use of green steel at the final product, which is for a car, is not as substantial.

Maybe it increases the cost of a car by one or two percent overall, which is still palatable for many of the customers.

For these automakers, we're also starting to see some of the renewable energy companies, especially wind turbine manufacturers and wind power companies starting to sign clean steel offt take agreements.

Again, for them, as a group scope three emissions, steel becomes a very very important part of the overall emissions and as a result, they're signing these clean steel offt take agreements with companies in order to reduce the emissions from their supply chain as well.

And so how much more are they willing to pay or what are the sort of premiums that they're needing to pay in order to get grant steel.

That's the part of the market where there is the least transparency At this point.

Companies are very very rarely disclosing what premiums they're paying for these contracts.

And sometimes these contracts, especially for automakers, are long term contracts seven years, sometimes six years, ten years, depending on the type of agreement, and the premiums can also vary over a period of time.

But typically for some of the first projects that are coming up in Europe, we are seeing premiums in the range of twin t to thirty percent being talked about for one hundred percent net zero steel, and that's a promising sign.

But there are also a lot of green steel products which are using the electrococ furness route or sometimes using approaches like a mass balance approach, where you have assigned a certain portion of the emissions reduction from a particular facility to a small batch of steel to claim that steel is net zero.

We typically don't see very high price premiums being associated with steel that is assigned a net zero tag using a mass balance approach, for example.

So there is also a differentiation between whether the steel that is made is actually green steel or whether it's an accounting process that is being used to come up with the green steel tag.

So then if we pivot now we talk about the petrochemical sector.

It's have less investment this year, but it is still one of the big four emitting sectors steel, petcams, aluminium, and cement, the big four that I always like to think about, how is that sector progressing in its stick carbonization activities this year.

Among the four sectors that you just mentioned, the petrochemicals industry is probably the one that is the most behind when it comes to thinking about decarbonizing the primary production process.

There's still a lot of investment that goes into recycling projects, plastics recycling projects globally and in the last one year.

Most of the investments that we've seen is also in the recycling space or in the use of alternative feedstocks like bio based feedstocks.

So there are companies like Somtomo or other examples that have tried to come up with new projects that can use bio based feedstock to produce plastics.

So is this where the bioplastics that you may be using in your cutlery or other disposable items are coming from?

There?

Again, it becomes a little bit more of a nuanced discussion.

The category of bioplastics typically includes biodegradable plastics and bioplastics.

So biodegradable plastics often originate from either bio based materials or sometimes even feedstock like coal, which is then used to produce a certain kind of chemical or polymer which can disintegrate in the right environment into the soil or into the right composting environment.

So they are not typically a one is to one replacement for what we see in the plastics industry for other applications, so maybe the couplery that we see is definitely going to be the biodegradable kind than the typical plastics that you produce from a petrochemical production plant.

So the petrochemical production plant, bio based feedstock is also increasing, especially the use of feedstock like bio NAFTA and sometimes the use of biomethanol or bioethanol to produce chemicals directly.

So that's the rout that many of these companies are starting to use.

Right, So that's where the chemical building blocks for the plastic are coming from, rather than from oil products coming from a bio based feed stock.

But slow progress on that front in recycling, has there been an uptick?

I mean, we saw that the Global Plastics Treaty failed to get struck this year.

Disappointing outcome for addressing a plastic waste crisis is that has there been a slow down a subsequent slow down then in the industry's investments in plastic recycling.

Yes, there has been a slowdown this year when it comes to investments into recycling.

If you look at like the total investments for both recycling and bioplastics, it's totaled about one point eight billion dollars in twenty twenty five, and about a majority of that came from recycling, but it's still small compared to about five to six billion dollars that we've previously tracked in twenty twenty three or twenty twenty four.

So it's very likely that the full year investments for recycling, especially plastic recycling, is going to be well below what we've seen historically, and it comes down to a lot of factors.

The better chemicals industry overall is facing some tough times because of an increasing overcapacity globally, which means there's a lot more production that's happening than the demand in many of these major markets, and as a result, there's low margins.

Companies are less open to investing in new facilities, even if it's decarbonization or primary production at this point.

So there's a bit of slowdown overall in the petro chemicals industry, which is also reflecting in the recycling sector.

So now if we pivot to looking at the aluminium sector, and apologies for the Americans in the audience, I'm going to refer to this as aluminium and not aluminum aluminium.

How is how is that sector progressing?

Has there been has there been a good investment in the pipeline of projects to decalbinize this year.

In the first three quarters, we've tracked about just under two gigawards of clean power procurement from aluminium companies in different parts of the world, and that compares to about three gigawards of solar wind and batteries and the contracts associated with that that was procured in twenty twenty four.

So aluminum companies are definitely increasing the momentum when it comes to signing clean power purchase agreements in different parts of the world.

And it's been at this range of about two gig awards to three giga awards for the last three to four years now since twenty twenty two, which shows huge momentum from these companies.

To do this, we also have to understand that a lot of the aluminum smelters are already placed in markets with huge access to clean power sources like hydro.

For example, some of the largest aluminum smelters in Europe are located in the Nordic region with access to cheap hydro, and say it's the case in North America where it's located in markets like Canada with cheap access to hydro.

Even in China.

Over the last many years, a lot of the aluminum smelters have relocated themselves to regions with cheap access to hydro power in order to reduce their emissions.

So beyond just the clean power procurement that's happening in the aluminum industry, a lot of the aluminum smelters are also already operating on clean power in many of these markets.

So the additional procurement of clean power of wind solar batteries for primary aluminium smelting.

Is that being driven by a desire or incentives for these smelters to decarbonized or is it just that these are the law all of us cost forms of electricity supply now, so they're re contracting with new new sources.

Yeah, it's a combination of two.

So we do have companies that have the biggest ambitions to reduce emissions driving that big increase in the uptake of corporate renewable energy purchase agreements.

But at the same time, it's also coming down to economics because in many of these markets, solar and wind is cheaper than electricity that many of these companies can purchase from the grid, and that becomes another big economic rational for aluminum companies to invest in these nubal energy purchase agreements.

Great, so that there was a deep dive into three of the key sectors that the last one is cement, which isn't covered in this particular piece of research.

But how is the developments in the cement sector this year.

Yeah, we don't have a separate chapter on cemen, but we are tracking what's happening with respect to investment commitments and government commitments for the cement industry and we are starting to see momentum pick up.

The first CCS project, commercial scale SCIS project at a cement plant, was operational earlier this year in Norway, which is built by Heidelberg.

It captures about four in to thousand tons of carbon dioxide from the cement manufacturing process to produce low emission cement and it's a market project and several other projects are being proposed in Europe, especially in the next four to five years to build these first of a kind clean cement production projects using carbon capture and storage.

The primary ways in which cement manufacturers are today looking at reducing emissions to a net zero or a very low emissions state is through the use of carbon capture and storage, and in markets where there is the right incentives like EU for example, we're starting to see that momentum pickup.

We are also saying cement companies substitute more of the clinker, which is the cementitious material, which is the binder that gives the strength to construction in concrete.

And what cement companies are doing is you can reduce the amount of clinker in cement to some extent and substitute it with other materials called supplementary cementitious materials.

Usually we use materials like slag or the waste from glast furnaces or sometimes fly ash from cold power plants as an additional material and substitute clinker out of cement.

And if you reduce the amount of clinker, which is the most emissions intensive material within cement and concrete, you reduce the overall emissions foo print of cement as well.

So a lot of companies are trying to introduce new materials and increase the blending of these new materials within cement to reduce emissions.

So those are the two biggest ways in which companies are doing it, along with the use of a lot of bio energy and waste in the cement furnaces that a lot of companies are using to reduce the overall fuel related emissions.

Okay, so some progress all around on industries quest to decarbonize, but still early days.

The most important question really for the outlook for this sector really is when are these technologies going to reach a point of commercial competitiveness.

When are they going to be scaled up enough, proven enough, and down the cost curve to really start to take off and to accelerate in their deployment and their emissions reduction potential.

I know that's a very difficult question to answer, but what is your best guess of when that sort of inflection point may be and the industry moves beyond this sort of really early incubation stage where it's very dependent on large sums of government policy with early stage projects which are risky and it's hard to make the matter work to where it starts to look more like a wind or solar.

Yeah, that's a very good question, and it's also the question that my team spends the most time on because it's also the most complex question.

What we've come to realize is that some of these technologies like carbon capture and hydrogen are probably going to be more expensive.

We used to produce materials like steelo cement or petrochemicals over the next fifteen to twenty years compared to the conventional fossil fuel based production pathways we have.

So if you solely rely on economics for these technologies to be adopted in these industries, it is going to be a tough one.

But in some markets we do see progress happening, and that's where you have the right environment of a carbon pricing policy, or you have the right customers are ready to pay a premium to buy some of these green products in order to decarbonize their own supply chain and their own emissions footprint.

So if the question is can these technologies come down the cost curve and be competitive and reduce emissions and achieve net zero at a cost point or a price point that is compared to conventional maybe not in the next twenty years, is the unfortunate answer.

I mean, and that makes sense because they are I mean, in the case of ccs, it is really just an additional cost, and in the case of hydrogen or bio energy or essentially using a less efficient pathway to provide the chemical inputs that are required.

So no easy pathway to cost parity or perhaps not getting there.

How about being commercial of commercial scale, when do we feel like, what's your best guess, So, when do you think that we can start to hit a bit of an inflection point and get more deployment of these technologies.

So from a technology perspective, there's definitely different time frames for different sectors and how each of these technologies play within each of these sectors.

For cement, as we discuss previously, the first commercial scale project that is ready to capture carbon dioxide from cement production when operational earlier this year, which means if you're thinking about technology maturity, that project is already up and running and we have about two to three years to understand more about this technology.

And there are several more projects that are looking to do this that's coming online this decade itself.

So CCS for cement, you're starting to see deployment already happening.

When it comes to hydrogen for steel, a lot of the first furnaces directroduction furnaces that are capable of operating on both natural gas and hydrogen are already operational and some are be getting built over the next two to three years.

Again, from a commercially available and readiness perspective, they are also available this decade.

Now, many of these furnaces haven't used one hundred percent hydrogen to test the results of what this means for commercial scale production, and we'll start to see more results of this coming out again in the next two to three years.

The first project that I'm looking forward to is to see results from Stegras project in Sweden and how they're able to commercially get this project up and running with one hundred percent clean hydrogen source, and that can really create the foundations for understanding how to use hydrogen in the direct production process and in the steel mainking process.

So I would say in the early twenty thirties is when we have a commercially deployable model for hydrogen based direct production furnaces.

Globally.

There are lots of projects happening now that's expected to come by twenty thirty, but if you want really commercially available projects to like scale up, my guess is it will be in the early twenty thirties.

So that's kind of the big ones when you think about ccs and hydrogen ccs for steel.

While the technology itself is commercially available, its use at projects is likely going to move into the next decade.

It probably not a priority for a lot of steelmakers in this decade, so we only see most of the announcements for the use of ccs and steel plants, especially blast wellnesses targeting early twenty thirties or late twenty thirties at this point.

So still a lot of hard work ahead for the heavy industry sectors to decarbonize, to commercialize, and to move down the cost curve as much as they possibly can.

Alan, thank you very much for providing us set insight into what has happened in this year, and we look forward to hearing your predictions for what happens in twenty twenty six early next year.

Thank you so much, Gobor for having me.

Thank you.

Today's episode of Switched On was produced by Cam Gray with production assistants from Kamala Shelling.

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