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Industry and manufacturing are major contributors to U.S. greenhouse gas emissions. The industrial sector was the second-largest greenhouse gas emitter, accounting for 30% of all U.S. greenhouse gas emissions in 2022, and is projected to be the largest emitter by 2035. Within the industrial sector as a whole, manufacturing is the largest consumer of energy and emitter of greenhouse gases.
Industrial emissions derive primarily from burning fossil fuels, both directly for heat to power chemical reactions and indirectly for electricity to power machines. Other sources of direct industrial emissions include the chemical reactions themselves (notably in the production of cement) as well as leaks from equipment. The trade and transportation of industrial goods also contribute to emissions in a globalized economy, but those emissions are attributed to the transportation sector.
There are opportunities across the industrial and manufacturing sector to contribute to emission reductions, including by:
Several federal agencies regulate the U.S. manufacturing industry. The U.S. Environmental Protection Agency is responsible for regulating industry practices to minimize pollution and harm to public health and the environment. Other agencies like the Department of Energy and National Institute of Standards and Technology in the Department of Commerce have programs that encourage low-emissions industry and manufacturing processes. State governments also play an important role in creating policies to decarbonize their industrial sectors.
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Heavy industry is the main industrial source of greenhouse gas emissions. It includes fossil fuel production, chemical production, some types of mining, steelmaking, cement-making, and the production of other building materials.
Chemicals: Chemicals are used in the production of 96% of all U.S. manufactured goods. The chemical industry accounts for 4–6% of global greenhouse gas emissions, and it is dependent on fossil fuels both as a feedstock for production and as an energy source for processing materials into finished products. It is the largest industrial consumer of energy but only the third largest industrial emitter of direct carbon dioxide pollution, as half of the sector’s fossil fuels are used as feedstock rather than fuel. The sector’s emissions are largely associated with ammonia production (which represents 45% of carbon emissions from primary chemical production), methanol (28%), and high-value chemicals like ethylene and propylene (27%). The chemical industry also underpins more than 75% of clean energy technologies, such as solar energy (solar panels are laminated with ethylene vinyl acetate) and heat pumps (which use refrigerants). The industry can also reduce its own emissions by reducing demand for petrochemicals, improving water and energy efficiency measures, and transitioning to alternative feedstocks and energy sources.
Texas, California, and Missouri dominate emissions related to cement production, while Indiana and Ohio are the leading states for emissions relating to iron and steel production.
Building materials: Building materials like aluminum, cement, iron, and steel are the foundations of U.S. industry and economy, but they also have significant environmental impacts. Worldwide, the building materials sector accounts for approximately 37% of all greenhouse gas emissions.
Alternative materials and electric machinery can lessen the environmental impact associated with the production of building materials. For example, limestone calcined clay cement (LC3) has a lower clinker composition (the primary and most carbon-intensive component of cement), which reduces carbon emissions by 40% compared to conventional cement. Electric arc furnaces, meanwhile, are a popular lower-emission alternative to the traditional fossil fuel-powered furnaces that heat steel and iron. More than 70% of steel manufactured in the United States uses electric arc furnaces. Clean-burning hydrogen can also be used to replace fossil fuels in industrial processes requiring high temperatures.
Construction and demolition processes also present opportunities for reducing emissions. Using electric machinery that does not rely on fossil fuels, for example, is one option to reduce greenhouse gas emissions from construction. Building demolition in the United States produced 600 million tons of debris in 2018—twice the amount produced in municipal waste systems. Deconstruction is an alternative to demolition that allows for materials to be carefully harvested from a structure so they can be repurposed. Minimizing the need to produce new materials reduces greenhouse gas emissions.
Light industries use less energy than heavy industries like steelmaking and chemicals because the processes involved require lower temperatures. But light industry still accounts for 8% of all industrial emissions. Light industries cover a wide array of goods like electronics, clothing, and plastic manufacturing. Processed food and beverages and some mining activities also fall under this categorization.
Electronics: Electronics contribute to greenhouse gas emissions over their entire lifecycle: from raw material extraction to manufacturing to waste disposal. The manufacturing of semiconductors, which are critical components in electronic devices, is responsible for the majority of global emissions in electronics manufacturing—equivalent to the carbon dioxide emissions of half of all American households. But semiconductors are critical to decarbonization efforts, enabling electrification and energy efficiency improvements in many devices.
The disposal of electronic waste (e-waste) releases carbon dioxide, other greenhouse gases, and toxic chemicals when it is burned. These emissions pose public health concerns, especially for workers at unregulated e-waste sites and marginalized communities living in close proximity. Circular economy practices for electronics can reduce such emissions and alleviate the burden on surrounding communities. Safe and accessible electronics recycling programs are critical to supporting a circular economy.
Clothing: From yarn and fiber preparation to dyeing and finishing, clothing manufacturing is emissions- and resource-intensive. The clothing industry contributes to 2–8% percent of all global greenhouse gas emissions. Clothing production also requires a significant amount of water: a single cotton shirt, for example, requires about 713 gallons (2,700 liters) of water to produce. Synthetic materials such as polyester and nylon make up roughly 60% of clothing produced, and have a particularly large environmental footprint, as they are fossil fuel-based, release microplastics, and take longer to decompose compared to natural fabrics like cotton.
Clothing items also have short life cycles, with the average item being discarded after seven to 10 wears. Only 1% of all discarded clothing is recycled. Some U.S. companies are looking to repurpose existing textiles by collecting discarded textiles, shredding them, and creating new fabric from them. Others are using green chemistry to break down old materials into new fabric that can be used to produce more clothing.
Plastics: Plastic is one of the most ubiquitous materials in the global economy. The average American consumes and discards about 120 pounds of single-use plastic each year. The United States hosts many of the world’s largest plastic manufacturers, and 17% of global plastic materials production occurs in North America. An overwhelming 99% of all plastics are made from fossil fuels, and plastics account for 3.3% of global greenhouse gas emissions. Plastic does not break down naturally in the environment; consequently, plastic pollution harms ecosystems, food and water supplies, and human health. Green chemistry and bioplastics can help reduce carbon emissions and other pollution from the production of these materials.
Clean technology manufacturing is playing a growing role in the U.S. economy while meeting increasing U.S. energy demands. By supporting clean energy manufacturing, the United States can generate jobs, increase its competitiveness on the global stage, and reduce emissions. It also presents opportunities to lower energy costs, enhance grid reliability, and foster energy independence. While manufacturing clean technology inherently has environmental costs, these emissions are insignificant in comparison to the emissions avoided by using these technologies.
The energy transition is powered by the private sector, but policymakers can further support the clean energy transition by establishing renewable energy targets and providing market incentives to drive growth. Federal and state financial incentives for clean energy development have spurred the development of clean energy infrastructure in recent years, particularly following the passage of the Inflation Reduction Act (IRA) (P.L. 117-169) and Infrastructure Investment and Jobs Act (IIJA) (P.L.117-58).
However, in 2025, the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21) weakened or eliminated many of these laws’ incentives and other funding that catalyzed clean technology manufacturing projects. OBBBA most significantly impacts wind and solar generation, commercial electric vehicles (EVs) and EV charging, and energy efficiency. The clean technology manufacturing landscape was significantly disrupted, with about 266 gigawatts of proposed generation capacity—equal to 25% of current U.S. electricity generation—canceled in 2025, including more than 86,000 megawatts of solar capacity, 54,000 megawatts of wind capacity, and 79,000 megawatts of storage capacity.
Nonetheless, with continued support at the state level, investments from the private sector, and some federal programs and incentives still intact, clean technology manufacturing will remain an important fixture of the U.S. economy.
Solar: Solar is the fastest-growing renewable energy source in the United States. The manufacturing of solar photovoltaic panels requires components like cells, encapsulant, backsheets, glass, frames, and inverters. Federal manufacturing incentives in the IRA supported the launch of 127 new solar and energy storage manufacturing facilities. Texas, New York, Georgia, Ohio, and New Mexico saw the most investment in solar manufacturing from 2018 to 2024. OBBBA is set to phase out solar generation tax credits (sections 45Y and 48E) by the end of 2027, although projects that break ground by July 2026 are still eligible for the credit.
Wind: Wind is the fourth-largest source of electricity generation capacity in the United States, with over 153 gigawatts installed at the end of 2024. The United States hosts more than 500 wind energy manufacturing facilities. These facilities specialize in manufacturing and assembling components like blades, towers, and generators. The average utility-scale wind turbine comprises around 8,000 parts. While federal incentives for wind energy generation drive more business to these manufacturers, like for solar, OBBBA will phase out the wind generation tax credits (sections 45Y and 48E) by the end of 2027, with the exception of projects that break ground by July 2026.
Heat pumps: Heat pumps transfer heat instead of generating it, making them an energy-efficient alternative to furnaces and air conditioners. In addition to efficiently warming and cooling buildings and homes, they can also support the decarbonization of U.S. manufacturing. Industrial heat pumps (IHPs) are able to provide much of the process heat for industrial manufacturing. Research from the American Council for an Energy-Efficient Economy suggests that commercially available IHPs can use 33% less energy than fossil-fuel powered furnaces and reduce carbon emissions by 30 to 43 million tons per year—the equivalent of the annual emissions from 6.5 to 9.2 million gasoline-powered cars.
Electric Vehicles: EV manufacturing has dramatically accelerated in recent years. Federal policies like the IRA and IIJA supported this growth—with 65% of announced EV investment occurring since the IRA passed in 2022 and 83% of investment occurring since the IIJA passed in 2021. In early 2025, car companies in the United States operated 79 EV manufacturing facilities, which combined could manufacture 2.58 million EVs annually. However, since the passage of OBBBA, which eliminated several key EV-related IRA tax credits, the EV industry has experienced a decrease in investment. EV manufacturing is also not without its own environmental impacts as EV battery manufacturing requires critical minerals.
Green hydrogen: Green hydrogen can be used to replace fossil fuels in certain industrial processes, and is itself produced industrially. It is made cleanly, by using electricity from renewable energy to split water molecules into oxygen and hydrogen (taking the “H” out of H20). In 2024, Utah, Louisiana, Texas, California, Georgia, and Arizona had the most green hydrogen facilities in operation or under construction in the United States. Though promising as a carbon-free source of energy, green hydrogen accounted for less than 1% of domestic hydrogen production in 2024. One of the key hurdles to bringing this technology to scale is the high cost of electrolyzers (which remove the hydrogen from water molecules) and the complexities of hydrogen transportation and storage.
Green industry and manufacturing offer ample opportunity for advancing decarbonization, climate resilience, economic competitiveness, community revitalization, public health, and national security. However, the breadth of items produced by industry and manufacturing—all with different raw materials, manufacturing processes, and emission sources—defies a one-size-fits-all solution. Decarbonizing industry and manufacturing instead requires a more comprehensive approach, in which different actors collaborate and pursue several solutions simultaneously and at all stages of production. Solutions for decarbonizing industry and manufacturing include:
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