US Department of Energy to Splash $6 Billion to Green Heavy Industries

US Department of Energy Allocates $6 Billion to Decarbonize Energy-Intensive Industries

In a move to decarbonize energy-intensive industries, notably steel and aluminum, the US Department of Energy (DOE) has unveiled a significant funding allocation of up to $6 billion for 33 projects. These selected initiatives aim to reduce industrial greenhouse gas (GHG) emissions, create union jobs, revitalize industrial communities, and enhance the nation’s manufacturing competitiveness.

The funding, supported by President Biden’s Bipartisan Infrastructure Law ($489 million) and Inflation Reduction Act ($5.47 billion), will play a crucial role in scaling up emerging industrial decarbonization technologies essential for the current administration’s climate and domestic manufacturing goals.

Collectively, these projects have the potential to mitigate over 14 million metric tons of carbon dioxide (CO2) emissions annually, equivalent to the yearly emissions of 3 million gasoline-powered cars. The industrial sector alone contributes nearly one-third of the nation’s overall GHG emissions, making this federal investment transformative.

The funding will be complemented by the selected projects, leveraging over $20 billion in total funding. These projects aim to reduce carbon emissions by an average of 77% and are managed by the DOE’s Office of Clean Energy Demonstrations (OCED) under the Industrial Demonstrations Program, with a focus on strengthening America’s manufacturing and industrial competitiveness.

The selected projects cover a range of difficult-to-decarbonize industries, including 7 projects in chemicals and refining, 6 in cement and concrete, 6 in iron and steel, 5 in aluminum and metals, 3 in food and beverage, 3 in glass, 2 focused on process heat, and 1 in pulp and paper. This diverse representation underscores the broad scope of the decarbonization efforts across various sectors.

The announcement of decarbonization funding by the US DOE has the potential to drive a transformative shift towards “green” steel production in the United States, according to industry leaders and observers. While the US steel sector has made strides in producing recycled steel through electric arc furnace (EAF) mills, there is a growing recognition of the need to embrace cleaner primary steel production methods.

Steel giant ArcelorMittal and Microsoft-backed MIT spinout company Boston Metal are pioneering clean steel production using a unique electrolysis process. This innovation aims to help decarbonize the industry and meet the increasing demand for cleaner materials while reducing GHG emissions.

Globally, there is a rapid expansion of EAF production as steelmakers respond to the demand for cleaner materials and efforts to mitigate GHG emissions. Countries, particularly in Europe, are investing in technologies to reduce emissions in primary steelmaking, emphasizing the importance of green ironmaking technologies.

The potential for substantial emissions reductions both domestically and globally through the adoption of green ironmaking technologies is significant. By showcasing the feasibility of these technologies in the US, there is an opportunity to deploy them worldwide, leading to reduced emissions on a global scale.

In the iron and steel sector, six projects are earmarked for potential investment totaling $1.5 billion, with the potential to prevent around 2.5 million metric tons of CO2 emissions annually. Notable projects include Sweden’s SSAB AB, in negotiations for up to $500 million to establish a commercial-scale facility utilizing HYBRIT technology in Mississippi.

Cleveland-Cliffs is also in discussions for up to $500 million to transition its Middletown Works facility in Ohio to a hydrogen-ready direct reduced iron furnace. Vale USA has been selected for potential funding of up to $282.9 million to establish a production facility for low-emission iron ore briquettes on the US Gulf Coast, providing a sustainable alternative to traditional iron ore pellets.

In the aluminum and nonferrous metals sector, five projects are eligible for over $900 million in federal investment, aimed at reducing around 4 million metric tons of CO2 annually. The potential financial support from DOE’s decarbonization funding can help mitigate risks associated with the significant investment required for steelmakers to decarbonize.

Hilary Lewis, steel director with Industrious Labs, emphasized the importance of government support in driving innovative and ambitious projects to achieve near-zero emissions. The DOE has clarified that the selection for award negotiations does not guarantee the provision of decarbonization funding, with the timeline for final decisions yet to be specified.

The DOE’s funding presents a critical opportunity to accelerate the transition towards green steel production in the US, positioning the country as a leader in sustainable steelmaking practices and contributing to broader efforts to combat climate change and reduce environmental impact.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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