Decarbonisation of Heavy Industry: Advisory Opportunities

The decarbonisation of heavy industry represents one of the most complex and consequential challenges of the energy transition, and for advisory firms with expertise at the intersection of energy, commodities, and finance, it is also one of the most significant sources of new mandate activity. Steel, cement, chemicals, and aluminium collectively account for approximately 22% of global CO₂ emissions, and the pathways to decarbonising these sectors are technically demanding, capital intensive, and highly dependent on the development of supporting infrastructure — particularly clean hydrogen supply and carbon capture and storage.

Steel decarbonisation is the most advanced of the heavy industry transitions in Asia. The two primary pathways — hydrogen-based direct reduced iron replacing the blast furnace route, and electric arc furnace steelmaking using scrap and green electricity — are both technically proven and commercially operational at scale in other regions. The challenge in Asia is the scale of the transition required: the region accounts for approximately 70% of global steel production, and the capital cost of replacing existing blast furnace capacity with low-carbon alternatives is estimated at USD 1–1.5 trillion over the next two decades.

The advisory opportunities in heavy industry decarbonisation span the full transaction and project development lifecycle. At the strategic level, Arkadia advises industrial companies on their decarbonisation roadmaps, helping them assess the technical options, quantify the capital requirements, and develop financing strategies that align with their corporate sustainability commitments and investor expectations. At the project level, the firm provides transaction advisory for the joint ventures, technology licensing arrangements, and infrastructure investments that are required to implement decarbonisation strategies.

The intersection of decarbonisation with carbon markets creates additional advisory complexity. Industrial companies that successfully reduce their emissions can generate carbon credits or reduce their compliance carbon cost, creating financial value that can partially offset the capital cost of decarbonisation investment. Structuring these carbon value streams — and ensuring they are recognised by relevant carbon market standards and regulatory frameworks — requires specialised expertise that Arkadia is developing as a core capability within its advisory practice.