Industrial clusters are geographic areas where co-located companies can provide opportunities for scale and sharing risk/resources. According to the World Economic Forum, industrial clusters can play a key role in helping develop “a unified and comprehensive approach to optimize emission solutions and create an integrated energy system.”
In a recent episode of the EPRI Current podcast, host Bill Florence spoke with two of the world’s leading industrial cluster researchers and scientists about the status and potential of industrial clusters worldwide: Dr. Sean Bushart, EPRI Director/World Economic Forum Fellow, and Jonathan Oxley, Senior Manager, CBI Net Zero team.
The following are edited highlights of this EPRI Current podcast conversation. You can listen to the podcast on all major podcasting channels or watch it on EPRI’s YouTube channel.
Understanding Industrial Clusters
Dr. Bushart, an EPRI-funded World Economic Forum project fellow, began by discussing the concept of industrial clusters. “Industrial clusters have been around for over 100 years,” he noted. These clusters were historically co-located businesses and industries that economically benefited a particular region of a country. However, the new focus is on using industrial clusters to help achieve decarbonization goals. “Deploying industrial clusters for the purpose of decarbonization is at the forefront of the World Economic Forum’s decarbonization efforts,” said Dr. Bushart. He highlighted the importance of leveraging regional economics, policy, and shared infrastructure to meet corporate and regional carbon goals.
The Humber Cluster: A Case Study
Jonathan Oxley, who has worked to decarbonize the Humber industry at the Confederation of British Industry (CBI), provided a detailed example of an industrial cluster. “The Humber estuary, located on the east coast of the British Isles, is a significant industrial cluster,” he explained. This cluster includes a variety of industries, from steel production to petrochemicals, and is responsible for about 7% of the UK’s total CO2 emissions. “Decarbonizing the Humber is crucial for the UK to meet its net-zero target by 2050,” Oxley added.
The Role of Infrastructure and Collaboration
Dr. Bushart and Oxley emphasized the importance of infrastructure and collaboration in decarbonizing industrial clusters. Dr. Bushart said that the cost of decarbonizing the steel industry globally by 2050 is estimated at $300 billion for capital equipment alone, with an additional $3 trillion needed for infrastructure. “Clusters can help by jointly investing in common infrastructure technology for clean hydrogen, clean electricity, and carbon capture,” he said.
Oxley agreed, highlighting the economies of scale that clusters can provide. “Whether it’s CO2 sequestration or the skills needed to install and operate decarbonization equipment, clusters offer unique advantages for cooperation,” he noted. He also stressed the importance of public-private cooperation within the Humber cluster. “It’s state-led, private sector-delivered,” he said, explaining that governments set the rules while businesses bring skills and finances to the table.
Challenges and Opportunities
One of the key challenges discussed was the value of a structured approach to decarbonization. “While clusters may have developed organically, decarbonizing them requires reaching out to different partners and creating a structured plan,” Dr. Bushart explained. These plans can include addressing policy enablers, permitting, and infrastructure development.
Oxley added that the speed of decarbonization and funding are critical factors. “It could take between 15 and 30 billion pounds to decarbonize the Humber cluster, depending on the speed of implementation,” he said. He emphasized that while the private sector is willing to invest, public finances are needed to bridge the gap until carbon pricing becomes more realistic.
The Importance of Regional Collaboration
Both experts emphasized the importance of regional collaboration. “Partnerships will be different in every region, which is the power of regional collaboration,” Dr. Bushart said. He noted that different regions may focus on different factors, such as the influence of a port or clean electricity. “It’s crucial to have the right regional policy enablers work together to make this happen,” he added.
Oxley shared insights from the Humber cluster, where businesses have come together to share infrastructure and resources. “Collaboration is key,” he said. “If companies aren’t collaborating hard enough to check if they’re breaching competition law, they’re probably not collaborating hard enough.”
Global Perspective and Knowledge Exchange
Dr. Bushart and Oxley also touched on the global perspective and the importance of knowledge exchange. “We’ve seen a lot of interest at Humber from clusters worldwide,” Oxley said. He mentioned delegations and fact-finding missions from regions like California, Houston, the Netherlands, and South Africa. “This is business striving to discover how businesses can decarbonize their operations for a more sustainable future,” he added.
Dr. Bushart encouraged listeners to explore the World Economic Forum’s Transitioning Industrial Clusters initiative, which includes a network of 21 clusters globally. “There are great resources available to understand how different clusters are approaching decarbonization,” he said.
Conclusion
This episode highlighted the important role industrial clusters can play in achieving net-zero emissions through infrastructure, collaboration, and regional policy enablers. As Dr. Bushart and Oxley emphasized, the journey to decarbonization requires a concerted effort from the public and private sectors to help create a sustainable and economically viable future.
