7 Industry

Status of the sector, development trends and implications

Energy-intensive industries, iron and steel, non-ferrous metals, chemicals and fertilizer, petroleum-refining, cement, and pulp and paper, account for about 85% of the industry sector’s energy consumption in most countries. Since energy use in other sectors grew faster, the sector’s share in global primary energy use declined from 40% in 1971 to 37% in 2004 [7.1.3].

Much of this energy-intensive industry is now located in developing countries. Overall, in 2003, developing countries accounted for 42% of global steel production, 57% of global nitrogen fertilizer production, 78% of global cement manufacture, and about 50% of global aluminium production. In 2004, developing countries accounted for 46% of final energy use by industry, developed country for 43% and economies in transition for 11%. Many facilities (for aluminium, cement and fertilizer industries) in developing nations are new and include the latest technology with lowest specific energy use. However, as in industrialized countries, many older, inefficient facilities remain. This creates a huge demand for investment in developing countries to improve energy efficiency and achieve emission reductions. The strong growth of energy-intensive industries during the 20th century is expected to continue as population and GDP increase [7.1.2; 7.1.3].

Though large-scale production dominates these energy-intensive industries globally, small- and medium-sized enterprises (SMEs) have significant shares in many developing countries. While regulations and international competition are moving large industrial enterprises towards the use of environmentally sound technology, SMEs may not have the economic or technical capacity to install the necessary control equipment or are slower to innovate. These SME limitations create special challenges for efforts to mitigate GHG emissions (high agreement, much evidence) [7.1.1].