Project ResultsIndustry Sector

In order to explore different pathways of industrial decarbonisation, we model four alternative scenarios that differ in their policy ambition, technological approach, and pace of transformation. Rather than predicting a single outcome, the scenarios illustrate how different strategic choices can shape technological change and the structure of production.

The scenarios represent distinct approaches to reducing emissions in energy-intensive industries, particularly through combinations of electrification, carbon capture technologies, and circular production processes.

BAU – Business as Usual

The Business as Usual (BAU) scenario represents the baseline pathway, assuming that only policies adopted by 2024 are implemented. In this scenario, industrial transformation proceeds gradually and relies mainly on incremental improvements of existing technologies rather than large-scale technological shifts.

Technological change is therefore relatively slow, with industries continuing to operate largely within current production systems while implementing partial efficiency improvements.

Carbon Capture and Storage (CCS)

In the CCS scenario, industrial decarbonisation is driven primarily by the deployment of carbon capture and storage technologies. This pathway assumes accelerated implementation of CCS wherever technically feasible, particularly in sectors where process emissions are difficult to eliminate through electrification.

In the energy sector, electricity generation is assumed to rely on a combination of renewable energy sources and nuclear power, ensuring sufficient low-carbon electricity supply while maintaining system stability.

Circular scenario

The Circular scenario emphasises the role of circular production systems and material efficiency in reducing industrial emissions. In this pathway, technological transformation focuses on increasing the reuse and recycling of materials, thereby reducing the need for primary production and lowering overall energy demand.

Circular production processes are combined with partial electrification of industrial activities, while the electricity system relies on a mix of renewable and nuclear energy sources.

Electrification scenario

The Electrification scenario represents the most ambitious technological transition in industrial production. In this pathway, industrial processes are gradually transformed through large-scale electrification, replacing fossil-fuel-based production methods with electricity-based technologies wherever possible.

Electrification becomes the dominant decarbonisation strategy across most sectors, while the electricity system itself is assumed to rely primarily on renewable energy sources.

Technology readiness in key industries

The technological feasibility of different decarbonisation options varies across industrial sectors. Electrification is currently the most advanced technological pathway for industries such as steel, aluminium, and paper production, with a technology readiness level of at least 6 out of 9.

In contrast, carbon capture and storage (CCS) remains the most likely option for sectors where direct electrification is more difficult, particularly in cement production and plastics processing, where the technology readiness level is estimated at 5–6 out of 9.

The production scenarios illustrates how the technological structure of industrial production subsectors may evolve under the four scenarios.

Regarding the choice of technology, we have conducted a relatively extensive literature review on low-carbon technologies and their overall technological readiness for implementation in production. In the following document you can find possible low-carbon technologies for each subsector that may be implemented within it to lower carbon emissions.

The figure presents the projected total labour demand in selected industrial sectors (fertilisers, plastics, iron and steel, cement, and recycling) under four alternative transformation scenarios: BAU, CCS, Circular, and Electrification. Values are expressed in thousands of jobs.

In the BAU scenario, labour demand increases only moderately, rising from approximately 61 thousand jobs in 2020 to about more than 66 thousand jobs by 2050, reflecting gradual technological change and limited structural transformation.

The CCS scenario shows a stronger increase in labour demand during the transition period, peaking at around 74 thousand jobs in 2040, before slightly declining to about 72 thousand jobs in 2050 as technologies mature and efficiency improves.

In contrast, the Circular scenario leads to a gradual decline in labour demand, falling from roughly 61 thousand jobs in 2020 to about 50 thousand jobs by 2050. This reflects increased material efficiency, higher recycling rates, and reduced primary production.

The Electrification scenario generates the highest long-term labour demand. Employment increases steadily from around 61 thousand jobs in 2020 to more than 70 thousand jobs by 2050, driven by the large-scale deployment of new low-carbon technologies and electrified production processes.

Overall, the results show that different decarbonisation pathways could lead to substantially different labour market outcomes, depending on the technological strategy and the level of structural change in industrial production.

The figure shows the total labour demand (direct and upstream) in selected industrial sectors—cement, fertilisers, plastics, and iron and steel—under four alternative transformation scenarios: BAU, CCS, Circular, and Electrification. Values are expressed in thousands of jobs and illustrate how labour demand evolves between 2020 and 2050.

In the BAU scenario, total labour demand increases moderately, rising by approximately 6 thousand jobs by 2050. Growth is mainly driven by the cement sector, while employment in iron and steel slightly declines.

The CCS scenario shows the strongest increase in labour demand, with employment rising by roughly 11 thousand jobs by 2050. This reflects the introduction of carbon capture technologies and higher labour requirements associated with new industrial processes.

In contrast, the Circular scenario leads to an overall decline of about 11 thousand jobs. Increased recycling rates, material efficiency, and reduced primary production lower the demand for labour across several sectors.

The Electrification scenario results in a moderate increase in labour demand of approximately 9 thousand jobs by 2050. The transition towards electrified production processes requires new technologies and infrastructure, which increases labour demand particularly in the cement and plastics sectors.

All in all, the results demonstrate that the structure of labour demand differs significantly across sectors and transformation pathways, highlighting how technological choices influence employment outcomes within industrial production.

The figure shows the total direct labour demand in selected industrial sectors—cement, fertilisers, plastics, and iron and steel—under four alternative transformation scenarios: BAU, CCS, Circular, and Electrification. Values are expressed in thousands of jobs and illustrate how labour demand evolves between 2020 and 2050.

The figure presents the evolution of upstream labour demand across sectors supplying industrial production under four alternative scenarios: BAU, CCS, Circular, and Electrification. Upstream employment includes jobs created in supporting industries along the supply chain, such as manufacturing, construction, energy supply, transport, services, and raw material extraction.

In the BAU scenario, upstream labour demand increases slightly, with total employment rising by approximately 1.6 thousand jobs by 2050. The increase is mainly driven by sectors linked to services, manufacturing, and construction, reflecting moderate growth in industrial activity.

The CCS scenario shows a small decline of around 1.2 thousand jobs in upstream sectors by 2050. While some activities related to new technologies increase labour demand, efficiency improvements and structural changes in supply chains reduce employment in several upstream industries.

A more significant reduction is observed in the Circular scenario, where upstream labour demand decreases by approximately 13 thousand jobs. This reflects the strong role of material efficiency, recycling, and reduced demand for primary inputs, which lowers activity in supply-chain sectors such as raw materials extraction and intermediate manufacturing.

The Electrification scenario also leads to a decline in upstream labour demand, with employment falling by roughly 5.8 thousand jobs by 2050. Although electrified production processes require new technologies and infrastructure, overall improvements in efficiency and changes in supply-chain structures reduce labour requirements in several upstream sectors.

Generally, the results highlight that different decarbonisation pathways influence not only employment within industry itself, but also across the broader network of upstream sectors that support industrial production.

The figure illustrates how the skill composition of employment evolves over time under the four analysed scenarios: BAU, CCS, Circular, and Electrification. Employment is divided into three categories according to qualification level: high-skilled, medium-skilled, and low-skilled workers, and values are expressed as shares of total employment.

Across all scenarios, medium-skilled workers represent the largest share of employment throughout the entire period. However, their share gradually declines from approximately 55.9% in 2020 to around 50–53% by 2050, depending on the scenario. This reflects structural changes in industrial production and the increasing importance of more specialised occupations.

At the same time, the share of high-skilled employment increases steadily across all scenarios. Starting from about 36.6% in 2020, the share of high-skilled jobs rises to roughly 42–44% by 2050. This trend reflects the growing importance of technical expertise, engineering skills, and advanced technological capabilities required for low-carbon production processes.

In contrast, the share of low-skilled employment gradually declines in all scenarios, falling from approximately 7.6% in 2020 to around 5% by 2050. This reflects increasing automation, technological upgrading, and the shift towards more knowledge-intensive production processes.

The transition to low-carbon industry increases the relative importance of high-skilled labour, while the share of low-skilled employment gradually declines across all scenarios.

The figure illustrates the change in employment between 2019 and 2050 by skill level and gender under four scenarios: BAU, CCS, Circular, and Electrification. Employment is divided into three qualification categories—high-skilled, medium-skilled, and low-skilled workers—and the results are presented separately for women and men.

Across most scenarios, employment increases for both female and male workers, particularly in the high-skilled category. For women, high-skilled employment rises from approximately 8,140 jobs in 2019 to around 10,000 jobs in the BAU and CCS scenarios, and to about 9,700 jobs in the Electrification scenario. A decline is observed only in the Circular scenario, where employment decreases due to lower overall industrial activity and reduced demand for primary production.

A similar trend can be observed for male workers, where the number of high-skilled jobs grows substantially in most scenarios. For example, in the CCS scenario, high-skilled male employment increases from around 14,200 jobs in 2019 to more than 20,900 jobs by 2050. The Electrification scenario also shows strong growth, reaching more than 20,200 high-skilled jobs by 2050.

In contrast, the number of low-skilled jobs declines across most scenarios, reflecting technological change, automation, and the increasing knowledge intensity of industrial production. Medium-skilled employment remains the largest category for both genders, although its growth varies depending on the scenario.

Overall, the results suggest that the industrial transition may lead to higher demand for skilled labour for both women and men, while reducing the relative importance of low-skilled employment within the sector.

The figure shows the percentage change in female employment by skill level relative to 2019 under four scenarios: BAU, CCS, Circular, and Electrification. Results are presented for high-skilled, medium-skilled, and low-skilled workers and illustrate how the structure of female employment evolves during the industrial transition.

Across most scenarios, high-skilled female employment increases steadily over time. In the BAU scenario, the number of high-skilled jobs for women rises by almost 24% by 2050, while in the CCS scenario the increase reaches approximately 25%. A similar trend is observed in the Electrification scenario, where high-skilled female employment grows by about 19%. These trends highlight the growing demand for qualified female labour in more technology-intensive industrial activities.

Medium-skilled female employment shows more moderate changes. In the CCS and Electrification scenarios, it increases slightly by around 5–12%, while in the BAU scenario it remains relatively stable. In contrast, low-skilled female employment declines in most scenarios, reaching decreases of roughly 12–20% by 2050, reflecting technological upgrading and reduced demand for low-skilled tasks.

The Circular scenario differs from the other pathways. Due to lower overall industrial production and higher material efficiency, total employment declines, which results in reductions across all skill levels for women, including high-skilled occupations.

Female employment tends to grow particularly in high-skilled occupations across most transition pathways, highlighting the increasing importance of qualified female labour in a decarbonising industry.

The figure presents the evolution of total capital costs and labour costs by skill level across the four analysed scenarios: BAU, CCS, Circular, and Electrification. Costs are shown for the industrial sectors included in the analysis—fertilisers, plastics, iron and steel, cement, and recycling—and are expressed in million euros. Labour costs are further disaggregated by high-, medium-, and low-skilled workers, allowing a comparison of how both investment and workforce costs evolve over time.

In the BAU scenario, total costs increase gradually between 2020 and 2050. Capital costs rise from approximately €486 million to about €629 million, while labour costs also increase moderately, reflecting steady industrial production and incremental technological improvements.

The CCS scenario shows a different pattern. Although capital costs remain relatively stable at around €493–516 million, labour costs gradually decline over time. By 2050, high-skilled labour costs fall to approximately €382 million, reflecting efficiency improvements and the maturation of carbon capture technologies.

The Circular scenario leads to the most pronounced cost reduction. As industrial production decreases due to higher material efficiency and recycling, both capital and labour costs decline substantially. Capital costs fall from around €486 million in 2020 to roughly €282 million in 2050, while labour costs across all skill levels decrease significantly.

In the Electrification scenario, capital costs decline moderately from around €486 million to approximately €387 million, while labour costs also gradually decrease. This reflects the transition toward electrified production processes that initially require investment but may lead to more efficient long-term operation.

Overall, the results indicate that different decarbonisation pathways lead to distinct cost structures, depending on the technological strategy and the scale of industrial transformation. Scenarios focused on circular production achieve the largest cost reductions, while more technology-intensive pathways maintain higher investment and labour requirements.

The table presents the percentage change in labour demand intensity relative to 2019, measured as the number of workers required per million euros of production (thousand persons per million €). The indicator combines both direct and upstream employment, providing an overall measure of how labour requirements evolve relative to economic output under each scenario.

The results show that changes in labour intensity remain relatively moderate across scenarios. In the BAU scenario, labour intensity reaches 98.6% of the 2019 level, indicating a slight decline in the number of workers required per unit of production, likely due to gradual productivity improvements and technological upgrading.

The CCS scenario shows a small increase in labour intensity to 105.2% of the 2019 level, suggesting that the implementation of carbon capture technologies may require additional labour inputs across both industrial operations and supporting supply chains.

In the Circular scenario, labour intensity declines slightly to 97.5%, reflecting higher material efficiency, reduced primary production, and more resource-efficient industrial processes. Similarly, the Electrification scenario shows a marginal decrease to 98.4%, indicating that electrified production processes may lead to modest productivity improvements over time.

Altogether, the results suggest that while different decarbonisation pathways significantly affect the structure and total number of jobs, their impact on labour demand intensity relative to production remains relatively limited, with only small deviations from the 2019 baseline.