DOE invests billions to clean up heavy industry

Heavy industry presents a foil to the Biden administration’s emissions reduction plans. From cement to aluminum manufacturing, the production of industrial materials tends to require a lot of heat — and fossil fuels to produce it. 

Yesterday, though, the Department of Energy announced its largest-ever investment in industrial decarbonization. The $6 billion pot, which will be divided between up to 33 projects chosen for award negotiations, represents the federal government’s most significant effort to invest in, and model, decarbonizing the country’s most energy-intensive sectors.

• The top line: Via the Industrial Demonstrations Program, DOE plans to award both industry stalwarts and newer players innovating on traditional processes. And the investment will span a wide range of hard-to-decarbonize sectors. This diversification has the potential to minimize investment risk for the federal government, and comes as the result of the Biden administration’s explicit push to put the U.S. at the forefront of the global energy transition. 
• The nuts and bolts: The funding will be supplied by both the 2021 infrastructure law and the Inflation Reduction Act. The projects chosen for award negotiations — which is not a guarantee of funding just yet — target what DOE describes as “the highest emitting industries where decarbonization technologies will have the greatest impact”: chemicals and refining, cement and concrete, iron and steel, aluminum and metals, food and beverage, pulp and paper, glass, and process heat. Before the funding is issued, DOE will negotiate with the selected applicants. Then the Office of Clean Energy Demonstrations will evaluate each project’s plan, including its approach to community benefits.

Most industrial processes need near-constant operation, which means that at an industrial scale, facilities consume exorbitant amounts of energy. All told, industrial heat serves as the single largest source of greenhouse gas emissions in the world.

The problem of how to achieve the high temperatures needed for these processes without a significant climate toll has attracted a slew of technologies and companies, most of which have zeroed in on a single industrial niche. 

Take the startup Sublime Systems, founded in 2020, which DOE included among the six cement and concrete projects chosen for the award negotiations. Cement has been in use for millennia, and is now one of the most-consumed materials in the world, second only to water.

However, Sublime co-founder and CEO Leah Ellis said on an episode of Catalyst that the most widely-used type — ordinary Portland Cement — is largely treated as one-size-fits-all, with significant emissions repercussions. Today, cement is responsible for 6-8% of global greenhouse gas emissions.

“For a long time, [Portland Cement has] overshot the technical requirements for certain applications,” Ellis told host Shayle Kann. “There are thousands of different things that we use cement for, and not all of them require the properties that Portland Cement brings.”

Sublime has developed a novel way to produce cement that replaces limestone, which is particularly carbon intensive to produce, with more abundant calcium silicate-based feedstocks. The company is eligible to receive up to $86.9 million for a new ultra-low carbon cement manufacturing facility in Holyoke, Massachusetts.

Other, longer-tenured beneficiaries are looking to capitalize on their established market shares with the move to new technologies and processes — and the new opportunity for public financing. 

The Swedish steelmaker SSAB, for instance, has historically emphasized its home country’s edge when it comes to green steel production. But armed with the possibility of up to $500 million in funding from the DOE program, the company now plans to build its first commercial-scale production facility in Mississippi, rather than in Sweden. The site will be supplied with green hydrogen and renewable energy by Hy Stor Energy.

Meanwhile, other players in industrial decarbonization are working on technologies that could reshape more than one sector. For instance, the thermal storage startup Rondo Energy uses electrical heaters to convert low-cost, intermittent renewable energy into process heat at 100% efficiency. The resultant heat battery can serve as a drop-in, zero emission replacement for natural gas boilers in a range of industrial processes, from food processing to fuel production.

On a separate episode of Catalyst, Rondo co-founder and CEO John O’Donnell said this new type of system is gaining momentum. 

“It’s only in the last few years that intermittent electricity has become the cheapest form of energy that humans have ever known in civilization’s history,” O’Donnell said. “This new class of electrothermal storage can play a role in tapping into that.”

Under DOE’s new investment, a project from beverage company Diageo that utilizes Rondo heat batteries could receive up to $75 million in funding. Diageo is partnering with Rondo and the National Renewable Energy Laboratory to replace natural gas-fired heat with the batteries, which will be powered by onsite renewable energy and electric boilers at facilities in Kentucky and Illinois.

Across the board, the projects selected for awards by DOE are expected to reduce emissions by an equivalent of over 14 million metric tons of carbon dioxide, or about equal to the annual emissions of 3 million gas-powered cars. 

To qualify for the funding, all projects must meet “deep decarbonization” targets set by program officials, illustrate their market viability, demonstrate that they can complete in a timely manner, and prove that they will benefit the surrounding communities. 

Nearly 80% of the projects chosen for award negotiations are in areas identified as priorities by the White House’s environmental justice initiative, Justice40.