Carbon neutrality initiatives in Material Industry

Material-Industry-related Companies

While countries around the world aims to be carbon-neutral by 2050, the material sector has embarked on decarbonization. In Japan, 40% of CO2 emissions derives from the material industry, of which iron & steel industry occupies 40% and chemical industry 15%. Therefore, the efforts at material sector are regarded as crucial to achieve carbon neutrality. The strategy toward carbon neutrality has been originally formed and implemented at each material sector, but the industry-wide efforts have not been made.

The efforts mainly on Scope 1 and 2 are underway, such as production of direct reduced iron (DRI) and use of electric furnace by iron & steel industry, resource circulation and renewable energy application in aluminum industry, and conversions of fuel and materials in chemical industry. As efforts on Scope 3 that involves entire supply chain have many challenges, each industry has just fully started understanding the Scope 3 emissions. However, for each of these industries to achieve carbon neutrality, it is indispensable to cooperate among entire supply chain and industries.  Now that less than 27 years until 2050, the whole material sector is required to deepen the alignment in the competitive as well as collaborative areas, which may connect to realization of carbon neutrality in the entire material sector.

This report contains the efforts for Scope 1, 2 and 3 by domestic companies, governmental policies, and the strategies in each of industries of the material sector including future business development, while providing the analytics on the perspectives and environment surrounding carbon neutrality in the entire material industry.  

I   Trends and Perspectives on Carbon Neutrality in Material Industry

• Sustainability in the material industry potentially achieved by coexistence with carbon neutrality.
• New competitive axis that can be built by cooperation among players with different positioning.
• For bringing about "Government x International Competitiveness", it is important to be able to discuss each of materials on the same table.
• For realization of carbon neutrality in the material industry that represents Japan, the government should take the initiative.
• It is significant to keep the balance between carbon neutrality and economy for reconstruction of business.
• As an answer for Japan to demonstrate to the world, Resource Circulation through Plastics Supply Chain
• For Scope 3 that should be the target, Is China's answer "Carbon Ledger"?
• To spread Carbon Neutrality furthermore, visualization for recycling and other efforts is required.
• Building of new business models for the material industry by means of technological innovation.
• Sustainable economy should be created by the factors of carbon neutrality and resource circulation.

II    Trend of Upstream Companies of Supply Chain

1. Trend of Upstream Companies in Iron & Steel Industry
   1) Overview
   2) Blast furnace steel manufacturer
   3) Decarbonizing technologies
   4) Green Steel
2. Trend of Upstream Companies in Aluminum Industry
   1) Overview
   2) Rolling processors
   3) Resource circulation
   4) Green Aluminum
3. Trend of Upstream Companies in Chemical Industry
   1) Overview
   2) Petroleum refining companies, petrochemical
   manufacturers
   3) Fuel conversion
   4) Carbon capture, utilization, and storage
   5) Chemical recycling
   6) Material conversion

III    Trend of Downstream Companies of Supply Chain

1. Trend of Downstream Companies in Iron & Steel Industry
   1) Automotive industry
   2) Construction industry
   3) Aviation industry
   4) Shipbuilding industry
2. Trend of Downstream Companies in Aluminum Industry
   1) Aluminum can manufacturers, beverage manufacturers
   2) Construction industry
   3) Automotive industry
   4) Shinkansen (Bullet train) vehicle
3. Trend of Downstream Companies in Chemical Industry
   1) Polymer manufacturer

IV    Domestic and Overseas Policies on Material Industry

1. Political Trend for Iron & Steel Industry
   1) Domestic policy: Aiming to achieve carbon neutrality by eco-processes, eco-products, eco-solutions, and innovative technological development
   2) The US Policy

• Energy saving is the key for achieving decarbonization, as electric furnace steelmaking method accounts for 60% of crude steel production.
• The US presses ahead with Net Zero through Industrial Decarbonization Roadmap

3. ) Policies in Europe

• In Europe, the carbon neutrality strategies have been formed by promotion of Smart Carbon Usage and Carbon Direct Avoidance
• The iron & steel industry, rather than trying to achieve carbon neutrality alone, places importance on collaboration among industry, academia, and government.

2. Political Trend for Aluminum Industry
   1) Domestic policy
   2) Overseas policy
3. Political Trend for Chemical Industry
   1) Domestic policy
   2) Overseas policy