Made in America still matters. Manufacturing accounts for 10.2 percent of US GDP and 9.7 percent of total employment and drives outsized impacts on the US economy. Manufacturing contributes 35 percent of national productivity growth and 60 percent of exports.

But global changes necessitate a new strategy to maintain competitiveness in manufacturing. Despite recent turbulence in domestic markets, worldwide demand for low-carbon technologies is growing. Simultaneously, demand for materials, including steel, cement, and chemicals is shifting to low-emissions products. Making investments now in these markets will promote learning and an early-mover advantage.

America has a carbon efficiency advantage in manufacturing, meaning that firms can produce similar goods as global competitors with fewer emissions. States with a set of enabling policies to decarbonize industry will be best positioned to capitalize on that advantage and export goods to global markets with tightening carbon emission requirements.

States are undertaking planning efforts, including developing Comprehensive Climate Action Plans (CCAPs) as part of the Climate Pollution Reduction Grants (CPRG) program, which provides federal funding for developing and implementing plans to reduce greenhouse gas emissions. This is an opportunity to identify interventions that modernize and decarbonize manufacturing to support competitiveness in growing markets.

State plans should emphasize industrial measures

Last year, 47 states and territories submitted their Priority Climate Action Plan (PCAP) to the EPA as part of the first phase of the CPRG program. States used the PCAPs to present an initial plan for reducing climate pollution, and industrial measures were noticeably absent. Only 25 states and Puerto Rico committed to acting on industrial emissions. Of the measures surveyed targeting industrial emissions, only 27 percent named a specific subsector.

But manufacturing is critically important to many state economies, contributing between 3.9 percent and 28.5 percent to state GDP. In 24 states across the nation, manufacturing represented 10 percent or more of total state GDP. The manufacturing sector also comprises 20 percent of national greenhouse gas emissions, making it an important sector to address in climate plans.

Leveraging the CCAP process, states can get a better understanding of where their industrial emissions are coming from, which technologies can best promote decarbonization, and what policies unlock investment decisions at the facility level. With careful planning, states can leverage their existing infrastructure and workforces to futureproof their industries and establish a competitive advantage in shifting global markets.

The public health and climate imperative to address industrial emissions

States can also reduce air and climate pollution through industrial emissions reductions. Certain industrial processes can release pollutants like particulate matter, nitrogen oxides, and sulfur dioxide, which are linked to adverse health conditions, ranging from asthma exacerbation to premature death and disease. Curbing emissions from facilities is particularly critical to the health of local communities, which are disproportionately impacted by exposure to air pollution.

Industry is also a leading source of climate pollution. In 2024, the manufacturing sector collectively released 987 million metric tons (MMT) of carbon dioxide equivalent (CO₂e), according to data from the Energy Policy Simulator. Unless states take action to curb emissions, the manufacturing sector is forecast to increase from 20 percent of national emissions in 2024 to 24.5 percent by 2050. Achieving emissions reductions requires solutions targeting manufacturing and access to clean electricity generation.

Sources of manufacturing emissions vary across states

Each state has a unique composition of manufacturing facilities and sectors. Because the umbrella term “manufacturing” covers a wide array of facilities, knowing the contribution of manufacturing to statewide climate pollution is only a starting point in developing a decarbonization plan. State leaders should prioritize measures in their CCAPs that are relevant to their state’s context, which includes the array of operating facilities across several manufacturing subsectors.

In the majority of states, chemical facilities are the largest single contributor to climate pollution from manufacturing. Chemical facilities face significant barriers to decarbonization because fossil fuels are used as both inputs and fuel for manufacturing final products. Emissions reductions measures targeting chemicals should consider alternative feedstocks and alternative production methods among the solution set.

The Great Lakes region, spanning from Pennsylvania to Minnesota, has the highest concentration of iron and steel facilities. These facilities rely on high temperature processes, which are not easily electrifiable. These states could consider retiring basic oxygen furnace facilities and transitioning to hydrogen-ready direct reduced iron processes as part of their industrial decarbonization plans.

CCAPs are an opportunity for states to develop an understanding of their industrial composition and present actionable priorities and policy measures that are tailored, technically feasible, and commercially viable.

Cross-cutting strategies deliver impactful emissions reductions

While each state’s plans and priorities will look different, there are four categories of cross-cutting technical interventions that states can apply across most facilities: energy efficiency, electrification, low-carbon fuels and hydrogen, and carbon capture. These categories are not exhaustive but are instead starting points for determining the most appropriate equipment, investment, and timeline for implementation. Other sector-specific technological interventions, such as incorporating supplementary cementitious materials for cement and biorefinery conversion at refineries, offer additional considerations to reduce process emissions from specific facilities.

In the near term, energy efficiency is the most cost-effective opportunity for reducing energy consumption and greenhouse gas emissions. The Department of Energy found that the United States has the potential to double its annual rate of improvement in energy efficiency through 2030. Extended through 2050, this equates to a 17 percent reduction in fuel use relative to business as usual. Based on the Energy Policy Simulator, an open-source model for estimating the impacts of energy policies, a 17 percent reduction in fuel use can reduce cumulative emissions from manufacturing by up to 612 MMT CO₂e through 2050.

Of the set of strategies, electrification of thermal processes across facilities is the highest impact opportunity for reducing emissions. If nearly all industrial processes below 400°C are electrified by 2050, the United States can reduce emissions by a cumulative 3,718 MMT CO₂e through 2050, meeting 52 percent of overall emissions reductions from the set of strategies.  Electrification of equipment and processes is particularly viable in industries that rely on low or medium temperature heat (i.e., below 400°C), particularly in the food and beverage, pulp and paper, and some chemical facilities.

In the mid and long term, low-carbon fuels and hydrogen can displace fossil fuels in heavy industries. Heavy industries, including iron and steel and cement, require high temperature heat that is not easily electrified. Carbon capture and storage can eliminate the final percentage of emissions that cannot be reduced through other interventions.

The reins are in states’ hands

While industry stakeholders may want more federal or international support to decarbonize, many actions are cost-effective now, and there are advantages to being first movers. Creating a supportive policy environment for industrial modernization begins with proper planning and identification of priorities. States can leverage CCAPs for this process, setting the stage for near-term action to promote industrial competitiveness and reduce air and climate pollution. Given industry’s long lead time on investments, capitalizing on this moment sets states up for the long term.