G7 must lead on decarbonising heavy industry: IEA

G7 members must "explicitly target emissions from heavy industry sectors," and act as "first movers" to work towards net zero greenhouse gas emissions for the sector, Paris-based energy watchdog the IEA said.

The bloc should reach a net zero emissions target through policy and a combination of support mechanisms, including subsidies and mandates for near zero-emission materials, the IEA recommended.

Heavy industry — such as steel, cement and chemical production — accounts for around 70pc of global industrial emissions, at 6bn t/yr, the IEA said. But a global energy transition will increase demand for these products, given their use in renewable energy infrastructure such as wind farms and electric vehicles.

For G7 members — Canada, France, Germany, Italy, Japan, the UK, the US and the EU — heavy industry is responsible for more than 15pc of coal use and around 10pc of oil and gas consumption. China is the only single country with larger heavy industry sectors than the G7 bloc combined, the IEA said, making it key that G7 members mobilise their economic and innovation power to lead a global transition to net zero heavy industry.

The IEA set out a tight timeframe for G7 members to act. G7 members should develop sustainable transition plans — backed by clear policy — by the mid-2020s and funding for innovation technologies should be in place in the next year or two. Members should build finance mechanisms to support decarbonisation over the next three years and should develop policies to create differentiated markets for "near zero emission material production" within four years, the IEA recommended.

The group must also "consolidate existing work on measurement standards" to evaluate emissions intensity, according to the report. Climate reporting standards globally are often fragmented, acting as a stumbling block to a smooth energy transition, industry leaders said earlier this month.

And "stable, absolute and ambitious thresholds" should be set, including interim targets to lower emissions intensity, the report recommends. G7 members should also work to reduce emissions across the supply chain.

The heavy industrial sector will need to overcome several challenges, including decarbonisation technology, which is not often available at commercial scale, as well as the high cost of emissions reduction and the globally-traded nature of many products — which keep margins slim for producers. Energy efficiency will be part of the solution, but "ambitious, stable and well-designed policy frameworks are vital to create conditions for heavy industry sectors to transition rapidly," the IEA said.

The watchdog also called for a focus on decarbonising the cement sector at the UN Cop 27 climate summit, scheduled to take place in November in Egypt.

The IEA released its Achieving Net Zero Heavy Industry Sectors in G7 Members report today, 19 May. The report was requested by Germany's 2022 G7 presidency.

By Georgia Gratton