Sector Spotlight: Industrial Decarbonization

In this post, I’ll focus on how DOE’s Loan Programs Office (LPO) can advance industrial decarbonization projects in support of the Biden-Harris Administration’s clean energy goals. Through a variety of loan programs, LPO is working with borrowers to reduce the greenhouse gases (GHG) footprint of any industrial process using innovative, lower carbon technologies.??

Decarbonization of energy- and carbon-intensive industrial sectors is critical to achieving the Biden-Harris Administration’s ambitious goal of net zero economy-wide emissions by 2050. Emissions from eight industrial sectors—chemicals, refining, iron and steel, food and beverage, cement, pulp and paper, aluminum, and glass—account for about 14% of total U.S. emissions. Most of those emissions come from producing heat for industrial processes, processing materials that release carbon dioxide, and generating electricity.?

As we describe in our LPO Tech Talk on Industrial Decarbonization, specific industrial decarbonization levers vary across industrial sectors and in technological maturity and cost. Innovative low-carbon industrial technologies and processes are emerging but will require considerable investment to reach technological and commercial maturity. Electrification, which can substitute the need to burn fuel, and increased energy efficiency, which reduces overall energy needs per unit of output, are also projected to play notable roles. Abating remaining emissions may also require scale-up of carbon capture, utilization, and sequestration (CCUS), although breakthroughs and cost reductions in innovative technologies could minimize that need.??

However, there are numerous barriers to industrial decarbonization. Challenges include a small portfolio of existing technologies ready for commercial deployment, high cost and complexity of implementation, high cost of equity capital, lack of competitive short-term returns, and absence of enabling infrastructure. DOE recently highlighted the opportunities and challenges associated with decarbonization of the eight industrial sectors of focus in the launch of its Pathways to Commercial Liftoff report on industrial decarbonization.??

LPO can play a vital role in addressing these challenges by supporting decarbonization projects across industries, serving as a bridge to bankability for breakthrough projects and technologies and de-risking them so they can be developed at commercial scale and achieve market acceptance.??

LPO can support industrial decarbonization projects through a variety of financing programs appropriated through the Biden-Harris Administration’s Inflation Reduction Act. Title 17 Clean Energy Financing Program’s Innovative Energy and Innovative Supply Chain Program (Section 1703) can finance industrial decarbonization projects that use innovative technologies or processes not yet widely deployed within the United States. The Title 17 Energy Infrastructure Reinvestment program (1706) can provide financing for industrial decarbonization projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or to enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases. Finally, the Tribal Energy Financing Program provides financing to federally recognized tribes and qualified Tribal energy development organizations for energy development projects, including industrial decarbonization projects. Seperately, the Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) program, enacted through the Administration’s Bipartisan Infrastructure Law of 2021, provides financing for large-capacity, common-carrier carbon dioxide transportation projects (e.g., pipelines, rail, shipping, and other transport methods) that can serve as supporting infrastructure for certain types of industrial decarbonization projects.?

Industrial decarbonization will not only help advance the shift to a net zero economy, but also support the Biden-Harris Administration’s?Investing in America?agenda to onshore and re-shore domestic manufacturing of critical technologies, contribute to the creation of well-paying jobs for American workers, spur economic growth, and create a cleaner, healthier future for all Americans. Additionally, decarbonizing the industrial sector is critical to equity goals, specifically the Administration's?Justice40 Initiative, which pledges that at least 40% of overall benefits from Federal investments in climate and clean energy be delivered to disadvantaged communities.

INDUSTRIAL DECARBONIZATION – BIOFORGE MARSHALL

In June 2024, LPO announced a conditional commitment to Solugen Inc.’s wholly owned subsidiary Bioforge Marshall LLC (Bioforge Marshall) for a $213.6 million loan guarantee to finance the construction of a production facility in Marshall, Minnesota, for bio-based organic acids. The new facility, Bioforge Marshall, will house three modular trains manufacturing various organic acids for use in the concrete, cleaning, agricultural, and energy industries —cutting harmful emissions from hard-to-decarbonize sectors while helping deliver healthier communities across the nation.??

The Bioforge Marshall project will help re-shore industrial production capacity for chemicals that are largely produced in other countries such as China, boosting domestic supply chain resilience and stabilizing costs for industrial off-takers. Solugen’s products compare favorably on unit prices compared to existing chemicals, with calculated savings potential of up to ~40% depending on the incumbent chemical that Bioforge Marshall products are replacing.??

INDUSTRIAL DECARBONIZATION – IRG ERIE??

In July 2024, LPO announced a conditional commitment for a loan guarantee of up to $182.6 million to IRG Erie, Inc. (IRG Erie) to finance the construction of a plastics recycling facility in Erie, Pennsylvania, and an injection system tower at a steel manufacturing facility in northwest Indiana. The new recycling facility will mechanically recycle polyethylene terephthalate (PET), high-density polyethylene (HDPE), and polypropylene (PP) polymers, converting approximately 160,000 tons per year of post-consumer waste plastic into approximately 100,000 tons per year of recycled plastic materials that will be used to replace virgin plastics. Recycled plastic production uses 50% less energy than traditional plastic production from fossil fuels, and the increased recovery rate of the plastics at this facility will result in further avoided virgin plastics production.?

The facility will also produce about 20,000 tons per year of CleanRed? from residual plastic output. CleanRed? can reduce greenhouse gas (GHG) emissions in the steelmaking process by replacing a portion of coking coal used in blast furnaces or anthracite coal used in electric arc furnaces. The CleanRed? produced by the facility will be used by an integrated (i.e., with a blast furnace) steel manufacturer in its site in northwest Indiana. IRG Erie will be the first company in the United States to produce and sell a plastic-waste-based iron reducing agent to a domestic steel manufacturer, helping to solidify America’s position as the global leader in low-carbon iron and steel products.?

?NEWS ROUNDUP?

• Decarbonizing 8 industrial sectors could require more than $1 trillion capital investment: DOE | Utility Dive?
• Solugen scores $214 million loan from DOE to make chemicals from corn sugar not petroleum (cnbc.com) ?
• DOE offers ‘game-changer’ $182M loan to IRG plastics recycling project | Waste Dive