The United States has long prided itself as being an innovator in industry. From developing new products, to finding new ways to make them more efficiently with less time, energy, and materials, American industry has helped shape the technology of manufacturing and lessened its environmental impact. But more must be done in order to reduce carbon emissions in a sector that accounts for about a third of U.S. greenhouse gas emissions and is a significant source of air pollution.
Many companies are developing plans and scoping out projects to decarbonize their operations, not only to reduce emissions, but also to ensure competitiveness within their sector globally. Before investing in new technologies in their facilities, businesses often look for proof of technological and financial feasibility.
This is where the U.S. Department of Energy (DOE) Office of Clean Energy Demonstrations (OCED) Industrial Demonstration Program (IDP) comes in. The program, funded by $6.3 billion from the Bipartisan Infrastructure Law and Inflation Reduction Act, has a goal of scaling up emerging technologies through demonstration projects in a variety of sectors. These projects aim to bridge the gap between research and commercialization, support more widespread adoption, and boost the U.S. manufacturing competitive advantage.
OCED announced 33 projects selected for award negotiations under the IDP in March 2024 and has awarded about half of them. The projects support efforts in a variety of sectors, including steel, cement, chemicals, and food production, using a range of decarbonization strategies including electrification and alternative fuels. DOE’s $6B investment is matched by over twice as much funding from the private sector. Among the selected applicants are several companies who are part of the Renewable Thermal Collaborative, which is co-convened by C2ES, as well as Business Environmental Leadership Council (BELC) members Eastman and Dow. These projects will benefit communities across 20 states in both Republican and Democratic districts.
The timing is pivotal, as getting these projects up and running as quickly as possible will have a significant impact on U.S. leadership in global markets. The European Union’s Carbon Border Adjustment Mechanism (CBAM), initially covering select emissions-intensive, trade-exposed industrial sectors, is expected to become fully operational in 2026. Other countries may adopt similar policies. Industrial facilities will need technical and financial support to maintain and improve their carbon advantage. Supporting leading-edge companies to implement these projects will have a ripple effect, increasing confidence in these technologies so that others are more likely to adopt them. We must also work to make sure that the U.S. not only leads the way in implementing these innovative technologies, but also manufacturing them to boost supply chains and create good-paying jobs. The IDP can also help advance both goals, in tandem with policies like the 45X Advanced Manufacturing Tax Credit and the 48C Qualifying Advanced Energy Project Tax Credit.
American industry needs to continue to innovate to stay ahead of foreign competitors, though technical, financial and supply chain risks create headwinds that necessitate federal support to de-risk nascent technologies. Programs like the IDP have demonstrated that when that support is provided, there are billions of dollars in private capital ready to invest in American solutions: the program was oversubscribed, with $60B requested by applicants—10 times the available budget—in 411 submitted concept papers.
As competitors in Europe and Asia move rapidly to try and stake a claim to the low-carbon future of key industries, it will be crucial for the OCED to finalize awards to IDP grantees swiftly. Congress should also provide additional funding to enable the IDP program to leverage private sector investments that can strengthen U.S. industry in the decades to come. American industry wants to lead the way and can provide investment, ingenuity, and jobs while lowering carbon emissions. We should answer their call through smart, strategic federal investment.