“Build Back Cleaner” by Investing $5 Billion in Demonstration Projects to Decarbonize Heavy Industry, Says ITIF

March 8, 2021

WASHINGTON—Heavy industries such as steel, cement, and chemicals account for a significant share of greenhouse gas emissions, and that share is continuing to grow, yet U.S. policy efforts to address the issue have been anemic. Most of the large-scale demonstration projects for promising solutions are happening outside the United States. To turn the tide, a new policy brief from the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, calls for investing $5 billion over five years in cost-shared U.S. industrial projects that seek to drastically reduce greenhouse gas emissions.

“A substantial investment in industrial decarbonization demonstration projects would put U.S. vendors and producers at the forefront of an emerging global competition to implement the most-effective climate solutions in emission-intensive industries,” said ITIF Senior Fellow David M. Hart, who authored the report. “It would put America’s unmatched innovation resources to work in a globally vital cause—and it would create jobs and economic activity in the process.”

The policy brief explains the key barriers to decarbonizing heavy industry and reviews the shorcomings of the federal response to date. A key challenge has been that low-carbon alternatives in heavy industries are substantially more expensive than regular steel, cement, and other industrial products. This is where federal investment in research, development, and demonstration (RD&D) can make a critical difference—by providing a “supply-push” to reduce the difference, thereby enabling demand-pull policies such as regulation and procurement to have a much greater impact.

ITIF’s policy brief calls on Congress to invest $5 billion over five years in industrial decarbonization demonstration projects as part of the infrastructure package that is expected to be the centerpiece of the Biden administration’s “Build Back Better” agenda. Projects can vary in scale from 10s to 100s of millions of dollars each, with a total of approximately 50 projects triggering a comparable investment from industrial partners. The portfolio should encompass numerous industries, pursue multiple technological pathways within each industry, and include the first- through third-of-a-kind projects, as authorized by Congress.

“There needs to be a boost in federal investment aimed at industrial decarbonization solutions across the entire innovation process, from basic research to early adoption,” said Hart. “The European Union and other countries around the world are much farther ahead with public-private partnerships conducting large-scale demonstration projects in steel, cement, petrochemicals, and other industries. But Congress and the Energy Department recently have started laying foundation for the United States to do the same thing, and U.S. industry has indicated its willingness to participate. Lawmakers and the administration should seize the opportunity to build back cleaner.”

Read the policy brief.