Australia produces many essential materials including steel, cement, aluminium and fertiliser.

These form an important part of Australia’s economy and are fundamental to construction, agriculture and manufacturing.

From the copper that carries electricity across the country to the cement that paves its roads, they support modern economies.

But producing them requires lots of energy, typically from fossil fuels, and generates excessive greenhouse gas emissions.

According to the Intergovernmental Panel on Climate Change, industrial activities are responsible for one quarter of global emissions.

Rethinking how these materials are produced is a key step in Australia’s transition to net zero.

What is industrial decarbonisation?

Industrial decarbonisation is the process of reducing or eliminating emissions produced by industrial activities.

Such activities rely on process heat, continuous power loads and chemical reactions that traditionally use coal, gas or oil.

Strategies to decarbonise include switching to renewable electricity, improving energy efficiency, and replacing fossil fuels with lower-emissions alternatives via electrification or low-carbon liquid fuels.

There is no single pathway to industrial decarbonisation.

Different industries require different solutions depending on how their emissions are produced. 

Why does it matter?

Industrial decarbonisation is both an environmental necessity and an economic opportunity. 

Industrial facilities support regional jobs and local economies.

They also strengthen Australia’s sovereign capability by helping produce materials domestically rather than relying on imports.

Yet much of Australia’s critical industrial infrastructure is aging, with many sites decades old and facing costly upgrades.

Not only that, as countries move towards net zero economies, demand for low-emissions products is growing.

As global markets shift, industries that can’t reduce emissions may become less competitive.

Countries that adapt early are likely to be better placed to compete in emerging low-emissions markets.

Successfully decarbonising industry can help Australia remain competitive while supporting regional communities and the transition to net zero.

What does industrial decarbonisation look like in practice?

There is no silver bullet. Successfully decarbonising industry depends on combining a range of strategies that address both industrial processes and the energy systems that support them.

These strategies include: 

Ensuring a consistent supply of competitively priced renewable energy 

Many industrial activities currently rely on coal and gas for heat and power. 

Where feasible, switching these processes to renewable electricity can significantly reduce emissions.

Ensuring industry has access to a reliable and competitively priced supply of renewable energy is therefore a critical part of industrial decarbonisation. 

Improved energy system planning 

As industries electrify and adopt new technologies, demand for electricity could increase. 

Industrial decarbonisation and energy system development, therefore, need to be planned together. 

Understanding where and when electricity demand will grow can help guide investment in energy infrastructure.

Better planning can reduce costs, avoid delays to infrastructure build-out and help ensure industrial facilities have access to the clean energy they need. 

Smarter energy use and improving demand-side flexibility 

Demand-side flexibility refers to industry’s ability to manage when and how energy is used.

For some industrial processes, this means shifting electricity demand to periods when renewable energy is more available.

This can help better align industrial demand with renewable energy supply while reducing pressure on the electricity system and the need for additional generation and network infrastructure.

Increasing investment certainty 

Decarbonising industrial facilities often requires significant upfront investment in new equipment, infrastructure and technologies.

Where policy settings are clear and cohesive – supporting both low-carbon production methods and access to green markets – businesses can make long-term investment decisions with greater confidence.

Industrial decarbonisation is a complex challenge, but it also presents a significant opportunity.

By reducing emissions from the materials and products that underpin the economy, Australia can help support regional industries, strengthen competitiveness and accelerate the transition to a net zero future.

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