Driving climate change solutions and sustainability stewardship
Decarbonization is essential in the fight against climate change, focusing on reducing emissions through sustainable practices and cleaner energy. While cities and mobility are often the focal point, industries and manufacturing are equally vital, contributing a significant share of global emissions. Their energy-intensive processes make them major emitters but also key drivers of change.
By adopting industrial decarbonization measures, manufacturers can cut emissions, enhance resilience and lead the shift toward sustainability. At Arcadis, we help industrial clients develop actionable decarbonization roadmaps that align environmental goals with business priorities. From renewable energy integration to process innovation, our solutions deliver tangible results.
This blog explores how industrial manufacturing is driving climate solutions, showing that decarbonization is not just necessary but an opportunity for industries to lead in sustainability.
The urgent need for decarbonization in industries and manufacturing
Industries and manufacturing are central to economic growth yet account for approximately 25% of global greenhouse gas emissions. With climate change accelerating, the urgency for industrial decarbonization has never been greater. Beyond environmental responsibility, decarbonization is now a business-critical priority influencing risk management, compliance and reputation.
Martijn Karrenbeld, Global Sector Director for Industrial Manufacturing at Arcadis, highlights the risks industries face if they fail to act. “Climate change is now one of the top business risks, threatening business continuity. Companies that don’t adapt may lose their license to operate in increasingly regulated markets,” he explains. Branding is another key driver, as sustainability attracts talent, consumers and investors, particularly among younger generations.
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Beyond compliance, the shift to sustainable practices brings economic benefits. Industries can reduce costs through energy efficiency, optimize processes and adopt renewable energy solutions that improve operational resilience. These measures cut emissions while creating competitive advantages in an increasingly sustainability-focused market.
Moreover, decarbonization strengthens long-term business resilience. By reducing reliance on fossil fuels and investing in cleaner energy, industries contribute to global climate goals, protect resources and future-proof operations. The industrial sector has the power to lead this transformation, proving that sustainable practices are both a necessity and a strategic advantage.
Global status of industrial decarbonization: progress and challenges
Industrial decarbonization is progressing worldwide, with key regions such as the US, UK and Europe at the forefront. However, industries still face significant challenges in scaling sustainable solutions. While many organizations set ambitious climate targets, regulatory complexities, financial constraints and technological gaps hinder progress.
Current efforts and progress in key regions
In the US, decarbonization is driven by federal incentives like the Inflation Reduction Act (IRA), which provides tax credits and funding for clean energy adoption. Many manufacturers are investing in electrification, hydrogen and carbon capture technologies. However, Hendrik-Jan Bakhuizen, Global Director Energy Transition and Executive Global Account Director at Arcadis, warns that shifting political landscapes could impact progress. “Geopolitical changes have major impact on sustainability and decarbonization, and energy reliability and affordability remain key. That said, the introduction to low carbon energy is expected to continue as increased energy consumption by AI needs to be secured.”
In the UK, industrial decarbonization is shaped by the legally binding net zero target for 2050. Policies such as the UK Industrial Decarbonization Strategy and initiatives like the Industrial Energy Transformation Fund (IETF) have accelerated transitions. The UK leads in offshore wind providing alternative energy sources. However, high transition costs remain a challenge, particularly with fluctuating energy prices.
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Europe is a global leader in decarbonization with aggressive policies under the European Green Deal and Fit for 55 package. The Carbon Border Adjustment Mechanism (CBAM) aims to further push industries toward cleaner operations by pricing carbon-heavy imports. However, Hendrik-Jan notes that geopolitical challenges are reshaping Europe’s energy strategies. “Many regions are now thinking about how to become less dependent on other parts of the world, particularly with energy security concerns following the Ukraine crisis. This is driving a shift in investment strategies affecting how industries plan their long-term decarbonization efforts. This might go hand-in-hand with the deployment of renewables.”
Challenges in industrial decarbonization
Despite regional progress, the industrial sector faces significant barriers in achieving net zero.
Technology Gaps
Many industrial processes lack viable low-carbon alternatives. Hard-to-abate sectors like steel, cement and chemicals require significant innovation in hydrogen use, carbon capture and process efficiency.
Regulatory Hurdles
Inconsistent policies create uncertainty for long-term investments. While some regions enforce strong climate mandates, others face political shifts that slow progress.
Financial and Supply chain Constraints
Transitioning to sustainable operations remains costly, particularly for energy-intensive industries. Many companies struggle to justify high upfront investments and a stressed supply chain without clear short-term returns.
Short-Term Profitability
Martijn notes that a business case must still be made for decarbonization to be embraced, and if it doesn’t promise financial returns, it’s unlikely to happen.
How industries are navigating these challenges
Despite these challenges, industries are taking innovative steps toward decarbonization.
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Energy Efficiency and Process Optimization
Companies are improving energy management, electrifying production lines and adopting circular economy practices to cut emissions with lower capital investment.
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Strategic Investments in Low Carbon Energy
Electrification is the obvious first step. Hydrogen and biofuels are emerging as key alternatives for industrial ‘hard to abate’ energy use, with large-scale pilot projects underway. Replacing coal with renewable natural gas already delivers a huge temporary improvement.
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Carbon Capture and Storage (CCS)
CCS is gaining traction in the US, particularly in hard-to-abate sectors. Hendrik-Jan notes, “While some remain skeptical about CCS, we might not be in the luxury position to pick and choose the best options for meeting climate goals.”
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Industry and Policy Collaboration
Businesses are working closely with governments to shape regulations that balance sustainability goals with economic feasibility.
While industrial decarbonization is complex, forward-thinking companies are proving that with the right mix of technology, policy alignment and financial planning, achieving net zero is both possible and essential for long-term business resilience.
