Industrial energy demand in both Rapid and Net Zero is relatively flat over the Outlook, dampened by increasing efficiency gains in industrial processes and an expansion of the circular economy. Industrial demand in BAU increases by around 15% (0.5% p.a.) by 2050, which is significantly slower growth than the past 20 years.
The increasing role of the circular economy in Rapid and Net Zero limits the growth in industrial output, as materials such as steel, aluminium and plastics are used less and are increasing reused and recycled. Combined with increasingly efficient industrial processes, energy used at the final point of consumption in the industrial sector falls by around 15% by 2050 in Rapid and by 25% in Net Zero. These falls are offset by the increasing use of electricity and hydrogen, especially in Net Zero, which boosts the demand for the primary energy used in their production.
The growth of industrial energy demand in all three scenarios is concentrated in the emerging world (outside of China) – especially, India, Other Asia and Africa – as energy- and labour-intensive industrial activities are increasingly relocated from the developed world and China to lower-cost economies.
The use of coal within industry falls sharply in all three scenarios. In BAU, the increased demand for energy is more than met by the growing use of gas and electricity, with coal consumption falling by around a third. The demise of coal use in industry is much more pronounced in Rapid and Net Zero where it is almost entirely eliminated in both scenarios by 2050, replaced by an increasing share of electricity, biomass and hydrogen. The shift towards low-carbon energy sources is most pronounced in Net Zero, such that the use of gas (and oil) also falls substantially by 2050. In contrast, the use of gas in industry in Rapid is broadly unchanged over the Outlook.