While emissions in hard-to-abate sectors have been falling, the progress is significantly slow when it comes to meeting the net-zero targets, a new report said on Thursday.
Moreover, an additional $30 trillion in investments will be required by 2050 to reach the net-zero targets, and over half of this will fall outside the hard-to-abate sectors.
According to the World Economic Forum’s latest Net Zero Industry Tracker, eight hard-to-abate sectors — steel, aluminium, cement, primary chemicals, oil and gas, aviation, shipping and trucking — have shown progress in reducing emissions. Together, these industries achieved a 0.9 percent reduction in absolute emissions from 2022 to 2023, while global energy-related emissions rose by 1.3 percent in the same period.
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More investments needed
The report also finds that the additional $30 trillion in investments required by 2050 includes $13 trillion of direct funding from the industries and $17 trillion from the wider ecosystem such as energy suppliers to these industries.
Encouragingly, nearly half of the required greenhouse gas emissions (GHG) reductions can be achieved with commercially viable technologies already available, as per the new research. The report also found that emissions intensity – or the average emissions per production unit – has declined 4.1 percent over the past five years, highlighting the impact of existing solutions. Intensified cross-sector collaboration, faster deployment of clean-energy infrastructure – in particular renewable electricity – and stronger policymaking will be crucial to advance these efforts and unlock the transformative potential of emerging technologies.
The Net Zero Industry Tracker 2024, produced in collaboration with Accenture, assesses the state of energy transition efforts and the future trajectory of the eight hard-to-abate sectors, which account for 40 percent of global greenhouse gas emissions. It examines key barriers to meeting net-zero goals and presents actionable pathways to accelerate progress, including a comprehensive readiness framework around related technologies, investment strategies, and policies.
“While there is a long way to go, it is encouraging to see that hard-to-abate sectors are making strides in emissions reductions, indicating that they are investing in the energy transition,” said Roberto Bocca, head of the Centre for Energy and Materials, World Economic Forum.
“Achieving net zero by 2050 will require unprecedented collaboration and financial innovation across sectors to raise the capital needed. However, we already possess many of the technologies and policy frameworks to act now,” he added.
Emissions decline
Despite increased output, the combined 0.9 percent reduction in emissions the eight sectors managed between 2022 and 2023 is a significant improvement compared to the increase of overall emissions globally in the same period. Moreover, while overall demand across the eight hard-to-abate sectors increased at an average of 9.2 percent between 2019 and 2023, total emissions and emissions intensity declined, showing that emissions reductions have been driven by improved efficiency and decarbonization efforts rather than reduced output. Indeed, five out of the eight hard-to-abate sectors (aluminium, cement, chemicals, aviation and trucking) reduced their emission intensity, driven by factors such as increased use of low-carbon power, reduced coal consumption, greater energy efficiency and more recycled metals.
The report highlights key barriers to reducing emissions in these sectors, including high interest rates, political uncertainties, trade restrictions and limited availability of new clean-energy technologies. Significant investments must also focus on developing infrastructure for low-carbon power, hydrogen, and carbon capture, utilization and storage. While infrastructure development for low-carbon power has been encouraging, hydrogen and CCUS infrastructure currently address less than 1 percent of sector requirements.
Help from AI
New this year, the tracker highlights the potential of generative AI to accelerate the decarbonization of hard-to-abate sectors. By enhancing productivity, streamlining operations and optimizing energy use, generative AI could improve capital efficiency by 5-7 percent, reducing net-zero investment needs by up to $2 trillion. Beyond cost savings, AI offers tools for asset management, R&D acceleration and transparency through product-level carbon reporting. However, the widespread adoption of AI could also significantly increase electricity demand, raising concerns about competition for limited low-carbon energy resources.
“Heavy industries hold the key to global decarbonization goals, with AI demonstrating real potential in helping meet the challenge of net zero,” said Muqsit Ashraf, group chief executive for Accenture Strategy. “Leaders who harness the productivity potential and economic value of generative AI will be on a reinvention-ready path — one that helps avoid expanding emissions and makes good on the promise of AI as a critical lever for decarbonization.”
Espen Mehlum, head of Energy Transition Intelligence, World Economic Forum, added: “A system approach is needed to simultaneously solve several challenges associated with scaling up clean-energy technologies and infrastructure important in the hard-to-abate sectors. Policymakers can accelerate developments by creating incentives aligned with the goals of the hard-to-abate sectors, energy suppliers and consumers to benefit everyone involved.”
