FEATURE
Low Carbon, No Problem
Industrial decarbonization is notoriously tricky. But some technology is ready for implementation. All that’s keeping it back is cost and logistics.
Written by Leslie Nemo
Photo: Getty
IN A NEAT PIE CHART showing the emissions tied to each major area of the economy, there is one big, awkward section: The industrial sector.
Consistently ranked as the second or third-highest source of emissions, industrial processes—a wide label that includes manufacturing, food production, forestry, and more—have a reputation as ones where cutting out carbon dioxide (CO₂) will be a tough task.
“The industrial sector has sort of been the forgotten stepchild of the climate movement,” said Teresa Cheng, the California director for the climate nonprofit Industrious Labs. If technology to eliminate emissions from transportation or energy production is fully mature or getting closer every day, progress in this sector is slower.
Among the questions dominating industrial decarbonization, however, are clear answers: Technology ready to plug in and provide resources like heat or even CO₂ itself in a cleaner way. While some of the sector needs technology that hasn’t been invented yet, the barriers to this equipment taking hold are more economic and political than anything else. Analysts, consultants, and local governments have ideas on how to get around those hurdles, and a few businesses have gotten to the other side.
A steel manufacturing facility. Photo: Getty
An infrared thermal scan shows a heat pump at work. Photo: Getty
Ready-to-Go
One of the most well-known approaches to industrial decarbonization is already in facilities scattered across the U.S. A number of industrial heat pumps are operational, according to a map from the American Council for an Energy-Efficient Economy. Some are kinds of electric kilns drying out lumber, while others help dairies with processing. The Hilmar Cheese Company in California, for example, installed a heat pump to create a more concentrated liquid extracted from milk called permeate.
The equipment can turn out hot air needed for what experts call low to medium-temperature process heat. Generally speaking, all the melting, drying, burning, sterilizing, or speeding along of different chemical reactions that industry requires means cranking up the thermostat. These actions make heat production the primary culprit behind the sector’s emissions.
Some processes are scorchers. Kilns used for creating a cement precursor reach 1,450 °C, for example. But about half of the power funneled into the industrial sector for process heat is to produce less extreme temperatures, or those within about 300 °C. The temperatures are most prevalent in sectors like food and beverage production, and wood or paper processing. Heat pumps can’t quite reach 300 °C, though they offer some of the lower needed temperatures. Other appliances, like electric boilers, make up the difference.
Businesses in these industries are also some of the Nyle Systems heat pump customers. The company started offering dry kilns in the 1970s, eventually expanding to industrial food dehydrators and heat pump water heating, said Jake Keniston, chief operating officer of Nyle Water Heating Systems, Inc. Dried fruit, pretzel, beef jerky, and even pet food manufacturers are interested in the dehydrators, while the kilns are popular with lumber processors. This dry-heat equipment is relatively standardized—the kilns, for example, are about 100 ft long and 50 ft wide—and built by Nyle.
All together, the technology’s availability is why programs organized around addressing decarbonization in industry see this temperature range as an ideal spot for making progress on the sector’s CO₂. The 2035 Initiative, a climate action think tank housed at the University of California, Santa Barbara, considers electric tech generating low to medium-temperature process heat to be the sector’s “low-hanging fruit.” It’s the same phrase that Cheng and her colleagues at Industrial Labs used to refer to the technology as well.
“We’re not talking about innovation. It’s not a technology problem,” she said. “There are all of these applications that use lots of gas combustion that can be electrified with commercially available technologies.”
Emissions Repurposed
Other ready-to-install equipment for emission reduction includes carbon-capture-and-reuse systems. Besides electrifying equipment, boosting energy efficiency, and adopting clean fuels, carbon capture is one of the tactics necessary for addressing the industrial sector’s contribution to climate change, said Samuel Gage, a senior scientist at CLEAResult Energetics LLC, an energy and sustainability consulting firm.
The gas capture approach has been popular with microbreweries in particular. Beverage producers typically buy liquid CO₂ to carbonate their beers, despite making the compound on-site during fermentation. Making the jump to in-house CO₂ reuse lets buyers eliminate or cut down on their deliveries while also reducing fermentation emissions.
A walkthrough of the various sustainable features at Russian River Brewing Company’s Windsor Brewery. Video: Russian River Brewing Company
A diagram of Dalum’s CO₂ capture system. Photo: Dalum USA
The Dalum system is meant to be as easy to install as a domestic washing machine. But other technically-ready decarbonization equipment is more involved than an outlet and a few hoses. The other half of Dalum’s business, for example, installs CO₂ liquification equipment in a range of different facilities that want to either inject the molecule in concrete mixing or sell it to drink producers. The equipment needs more individualized engineering, which raises the cost, and the gas the customers tap into is less concentrated. What’s collected from fermentation is about 99 percent CO₂, while other Dalum customers pull the compound from gases that are as low as 70 percent CO₂, Kiedrowski said. Every ounce of final CO₂ product is more expensive to make.
Elsewhere, the boilers that heat pumps can theoretically replace are often several stories tall and configured exactly for the natural gas systems. Swaps to electric equipment in these cases are intricate, one-off designs—and are extremely rare, said Nyle’s Keniston, because of the cost of replacing lines, heat exchanger coils, and all the other surrounding equipment.
Incentive Opportunities
If decarbonizing industrial facilities is cumbersome, time-consuming, and expensive, owners need to have good reasons for making the switch, Gage said. “No one is going to go broke decarbonizing if their competitors are not,” he pointed out. Sometimes, the effort is worthwhile if the result feeds into a climate-friendly image that certain customers are more willing to pay for or expect. For Nyle heat pump customers, quality final products might help motivate the change: Dehydrators and electric kilns allow for more precise and even moisture removal throughout the entire piece of equipment, Keniston said, so there could be less of a loss to overly dried-out boards or snacks on the periphery. For companies without that cache or quality change, the barriers to installation have to change.
The CO₂ capture systems are smaller-scale versions of technology that massive brewers have had for decades, said John Kiedrowski, managing director for Dalum USA. Inside a compartment like an oversized phone booth is a scrubber for removing impurities, a compressor, dehydrators, and a 1.5 to 3.5 horsepower motor. Gas is taken directly from the fermenters and the liquid output lives in a tank after being condensed by the brewery’s existing glycol supply.
A version of the equipment exists for a site making between 26,000 and 5 million gallons of beer a year, and the company helps customers right-size their installations by analyzing two weeks’ worth of production. The cost of making CO₂ with Dalum gear, accounting for water and electric use, hovers around 4 to 6 cents a pound. Most of the brewers that give the company a call are on the East or West Coast or places where CO₂ costs more or where shortages have been an issue. The Midwest benefits from cheap gas siphoned from ethanol production. Customers generally recover enough CO₂ to meet all their carbonation needs, save those that also pump the gas into seltzers or other non-fermented drinks, said Ashley Zerick, a sales and service representative with the company.
Dalum’s team recently installed three Senior CO₂ Recovery Plants at Russian River Brewing Company in California. These units seamlessly integrated with Russian River’s existing 50-ton bulk tank and vaporizer, allowing the brewery to capture and reuse CO₂ generated during fermentation. Photo: Dalum USA
One option may be to incentivize switching by paying for the upgrades. Federal grant programs in the Inflation Reduction Act (that have since been canceled) were offering this kind of aid, such as the more than $170 million the Department of Energy had awarded Kraft-Heinz to install heat pumps, electric heaters, and other clean equipment to decarbonize some of its manufacturing process.
States have set up their own grant programs, too. In California, the Industrial Decarbonization and Improvement of Grid Operations (INDIGO) program taps resources from the state cap-and-trade system to offer grants specifically for industrial decarbonization. This funding pool is what provided the Hilmar Cheese Company in California with an $8 million grant to help make its heat pump project possible.
A similar funding opportunity is getting started in Minnesota. Called the Minnesota Climate-Smart Food Systems initiative, the program has set aside $47 million for food and beverage facilities looking to decarbonize or cut pollutants and waste. It’s the state’s first foray into mitigating industrial greenhouse gas emissions, said Kevin Gaffney, a public affairs specialist for the Minnesota Pollution Control Agency.
And since it’s not just the price tags of new industrial equipment that manufacturers need help with—the program includes a roughly $7 million pot for technical assistance and planning costs. That way, grantees can hire consultants to help find their facilities’ unique layouts, heat, and energy-saving opportunities, and payback periods.
Companies looking to find affordable, feasible decarbonization changes have found assistance without grants as well. Milk-free dairy producer Oatly was recently considering updates to its New Jersey plant, like adding a heat pump to an existing heat recovery system or installing a dry cooler. The math on both options didn’t work out, said Chris Edmonds, a senior sustainability program manager for North America in a recent panel hosted by the Renewable Thermal Collaborative. Instead, Oatly opted for a thermal energy analysis to see if there were any other sources of heat to take advantage of.
Oatly blended input from energy advisors, in-house utility engineers, and the Department of Energy’s Industrial Training and Assessment Centers, a free program where university and graduate students help conduct plant energy assessments. The combined effort found that some low-quality waste heat—something evaporative coolers were helping emit—could be looped back around to preheat city water coming into the factory. Implementing the reuse would have a three-year payback and would begin thermal storage and the start of a hydronic loop that Oatly can add on to over the years, Edmonds said.
Coincidentally, industrial customers of the Nyle Systems water heating division are also often looking to repurpose facility waste heat. And since electrifying steam production is so expensive, a more successful route can be identifying parts of production that could be a little cooler. “What we’re seeing instead is decoupling from steam,” Keniston said. “What doesn’t need to be at steam temperatures?” For those parts of production, Nyle swaps in heat pump water heaters.
“There are all of these applications that use lots of gas combustion that can be electrified with commercially available technologies.”
—Teresa Chang, California director at Industrious Labs
U.S. manufacturing sector heat demand across temperature ranges. Process heat energy demands in U.S. manufacturing by temperature range and manufacturing sector. Image: Colin McMillan, “Manufacturing Thermal Energy Use in 2014,” NREL Data Catalog, 2019
Here and Now
The financials of changing out factory equipment can also be made appealing by shifting what it costs to run. Per unit of energy consumed, electric systems are better at converting power to heat. A gas furnace efficiency hovers around 80 percent, whereas a survey from the American Council for an Energy-Efficient Economy (ACEEE) found that working industrial heat pumps in the nation clocked efficiencies up to 430 percent. But in all but a few states, electricity is multiple times more expensive than gas.
The so-called “spark gap” is a major barrier to electric industrial adoption. Facilities in places where electric power is up to four times as costly as gas—a threshold only about 20 states fall under—could find it challenging to get a return on their investments within five years, according to an ACEEE report assessing industrial power rates in the Midwest.
The electric dilemma is particularly poignant in California. The state has more manufacturers than any other, and more than a third of its industrial fossil fuel emissions (not including heat for refineries) stem from 200 °C or lower heat production. California also plans to have 100 percent clean energy by 2045 and has had more renewable power integrated into the grid than any state besides Texas. Despite a sizable industrial sector ripe for conversion and statewide ambitions, electricity remains about five times more expensive than gas. That’s why Cheng and her colleagues at Industrial Labs along with the Sierra Club and Synapse Energy Economics suggested ways for utility pricing to incentivize industrial electrification and load-shifting.
In particular, Industrious Labs advocates for coincident transmission demand charges. Fees for commercial, industrial, and agricultural electric customers include charges for peak kW demand. Unlike utilities in other states, California providers keep that cost the same, no matter what time of day it happens. The result, Cheng said, is that the demand charge structure and other fixed costs end up being over half of some industrial customer bills, despite the state being flooded with cheap solar in the middle of the day. A switch to coincident demand would lower electric costs for manufacturing sites that maximize their power use to periods when the grid has extra clean energy generation. In turn, the facilities would put less pressure on peak-use times—and the power those periods require from the plants.
So far, California utilities haven’t adopted the coincident transmission demand policy Industrious Labs would like to see. Other adjustments in rate structure, like real-time pricing, have made limited progress. The California Public Utilities Commission will require providers to offer real-time pricing starting in 2027.
A common thread in the ways businesses are convinced to cut emissions is incentivization, Gage said. Compared to Europe, the U.S. likes to tempt corporate change with carrots, rather than implement policies like carbon taxes that make the status-quo burdensome. Pilot projects and state funding initiatives getting off the ground and the inevitable improvements in heat pumps and other installation-ready equipment will make decarbonization sweeter. Federal routes to more affordable conversions haven’t entirely disappeared, either. Tax credits for energy efficiency, clean hydrogen, and carbon capture are still available.
Straightforward invention is still in the future of industrial emissions reduction. What some of that equipment might look like for all the factories, plants, and operations that need it is still fuzzy. “Dealing with chemicals alone is a lifetime of work to decarbonize,” Gage said. Proof that dreamed-up equipment can become a daily reality, however, is already here.
Leslie Nemo is an independent writer in Brooklyn, N.Y.
Photo: Getty
© 2026 The American Society of Mechanical Engineers. All rights reserved.