Under former President Biden, the United States began to ramp up efforts to decarbonize its industry, encouraging companies to explore various ways to cut emissions. This includes incorporating cleantech, such as carbon capture and storage (CCS), into operations, improving efficiency, and using renewable energy sources and clean fuels.
The U.S. is now well on the way to decarbonizing a wide range of industries, but progress has stalled under the Trump administration in recent months, as the global competition begins to move ahead.
Decarbonizing U.S. Industry
The industrial sector drives the U.S. economy, producing chemicals, electronics, machinery, steel, textiles, and many other vital products. However, this comes at a cost, with the industry contributing around one-third of domestic greenhouse gas emissions.
Since the introduction of the Inflation Reduction Act (IRA) in 2022, various government agencies have supported decarbonization efforts with funding and targeted policies.
During the Biden administration, the U.S. Department of Energy (DoE) encouraged producers across various industries to use clean energy, increase efficiency, and integrate new, innovative processes and technologies to decarbonize operations to support a country-wide green transition. This was aimed at protecting public health and reducing the pollutants and toxic materials that disproportionately harm low-income households.
Industry is deemed a hard-to-abate sector, meaning it is a difficult area in which to reduce emissions. The DoE’s 2022 Industrial Decarbonization Roadmap identifies four key pillars to driving industrial emissions reduction, including the use of low-carbon fuels, feedstocks, and energy sources (LCFFES), enhancing energy efficiency: energy efficiency, industrial electrification, and the incorporation of CCS technologies.
The DoE also launched the Industrial Heat Energy Earthshot™, which set a goal to develop cost-competitive solutions for industrial heat with at least 85% lower greenhouse gas emissions by 2035.
The DoE and other agencies launched several funding opportunities to encourage various industries to invest in decarbonization efforts, such as the DoE’s 2022 $104 million Industrial Efficiency and Decarbonization funding opportunity announcement (FOA). In 2024, the Industrial Efficiency and Decarbonization Office announced an $83 million FOA to decrease emissions in the hardest-to-decarbonize industrial subsectors.
Stalled Decarbonization Efforts
Since coming into power, President Trump has attacked the IRA and the clean energy industry, with little regard for cutting emissions. Trump could now cancel billions of dollars in federal funding aimed at helping U.S. industries shift from fossil fuels to cleaner alternatives.
In May, the DoE announced that it was canceling over $3.7 billion in financing for projects aimed at cutting emissions from a multitude of power plants and industrial sites, or over half of the awards under the agency’s Industrial Demonstrations Program.
The DoE said that the proposed projects “failed to advance the energy needs of the American people, were not economically viable, and would not generate a positive return on investment of taxpayer dollars.”
However, critics of the move say that decarbonization efforts could have promoted economic growth by supporting job creation and making industries more internationally competitive, thanks to the rising consumer demand for more sustainable products.
State Driven Change
A March report from the environmental advocacy organization Evergreen Action, which assessed 25 states and Puerto Rico, offers a range of recommendations on how U.S. states might help maintain the momentum on industrial decarbonization. While they cannot match federal funding efforts, they could encourage industries to invest in relatively low-cost technologies to cut emissions, such as replacing fossil-fueled boilers with industrial heat pumps and electric boilers.
States could also introduce policies to collect fees from polluting industries to provide financing for decarbonization efforts. This approach could soon be seen in California, where the government is considering using the state’s greenhouse gas reduction fund to fund its AB 1280 bill, which aims to expand programs that support factory electrification and thermal energy storage.
“This is even more necessary now that federal support has backslid,” Teresa Cheng, the California director at the advocacy group Industrious Labs, said. Approximately 35,000 industrial plants currently pay into the greenhouse gas fund, and “that money should go back into cleaning up those facilities, commensurate with their polluting profile.”
Rising Competition if the U.S. Can’t Keep Up
If the U.S. starts to fall behind on its industrial decarbonization efforts, other countries could quickly become more competitive, as they provide consumers with more sustainable products.
More than 1,000 plants producing cleaner fuels, chemicals, and building materials are being developed across 70 countries, and China is leading the way with over 200 projects.
While only around 8% of the total projects are currently operational, the project pipeline has grown by around 300 projects since 2024. The pipeline is expected to continue growing at an accelerated pace, as countries worldwide act on pledges made at the annual COP climate summits in support of a global green transition.
If the U.S. allows its recent momentum in emissions reductions to stall, it risks falling behind countries that are decarbonizing their industries at a faster pace.
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