Decarbonizing Industrial Heat- an important puzzle piece to solving climate change

Decarbonizing  Industrial Heat - an important puzzle piece to solving climate change

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Thus far, a lot of attention in decarbonization efforts has been focused on transportation (EVs), renewable energy, and household heat electrification (heat pumps). Industrial heat, the lifeblood of manufacturing processes,  has not been in the center of attention. Wrongly so, since it powers a wide array of operations and processes and it is indispensable in hard-to-abate industries playing a pivotal role in the creation of diverse products. These span from commonplace household goods to essential components such as steel, integral to building structures and automotive parts.

Industrial heat, whether applied directly or indirectly, drives numerous processes. These encompass fluid heating, distillation, drying, and chemical reactions, with operational temperatures ranging from slightly above ambient to way above 1100°C. The production of certain materials, including metals, cement, and glass, demands these exceptionally high temperatures. Approximately half of industrial heat is applied to processes operating at low or medium temperatures below 400°C. The remaining half is used for high-temperature processes.

_{Figure 1 Sectoral and Thermal Energy Utilization  1}     

_{Figure 2 Thermal Profiling in Industrial Applications (1)} 

Industrial Heat: A Double-Edged Sword

While being ubiquitous in most industrial applications, industrial heat is also a significant contributor to global greenhouse gas emissions (GHG), industrial GHG emissions represent 22 percent of annual emissions.  Every industrial company must address its industrial heat to achieve net zero. Currently, the industrial sector heavily depends on fossil fuels as the primary source of industrial heat, equal to about 10 percent of global GHG emissions  (Figure 1²). This makes it a prime target for decarbonization efforts. The potential impact is enormous. Decarbonizing industrial heat could slash emissions from the industry, making a significant dent in our global carbon footprint. The market is now ready to explore more fundamental changes to existing processes.

_{Figure 3 Energy Dynamics: Global Demand vs. Industrial Supply Breakdown (2)}

The Road to Clean Industrial Heat

The shift to clean industrial heat is not just a requirement but an opportunity for innovation and sustainable growth, and numerous avenues are emerging. A new wave of innovations based on hardware, process, and software innovation is replacing fossil fuel-based  industrial heat with low-carbon alternatives. The solutions below (in order of ease of implementation/ technological readiness) provide a clear pathway.

Efficient Heat Management: Maximizing Potential

Efficient heat management is the most cost-effective option for GHG emission reductions in the near term. Industries can significantly reduce their carbon footprint by optimizing heat usage and minimizing waste. This approach requires no new energy sources, making it a cost-effective and immediately implementable solution. The energy crisis following the attack on Ukraine by Russia in February 2022 has pushed many companies to look deeply into efficiency potentials, and luckily, a lot were found alleviating the burden of higher cost and reducing the risk in case of lower supply. 

Innovator to watch:

• Orcan Energy offers efficient energy solutions for converting waste heat into electricity.

Electrification: Powering the Future

Electrification, the shift from other energy sources to electricity, is a well-established practice across industries. Examples include using electric arc furnaces in the steel industry and electricity for extracting pure aluminum from alumina. Generating thermal energy from electricity is becoming more appealing as low-carbon power costs drop, and the grid becomes more reliable. This transition to using electricity for industrial heat production offers a logical path to reducing heating-related emissions as we decarbonize the electricity mix. Technologies like heat pumps, electric furnaces, and electric boilers directly electrify industrial process heat, while thermal storage enables storing cheap and renewable electricity as heat for later use. Current technology can already electrify 78% of energy demand, while in the future, the technology currently in development can achieve 99% electrification.³

Innovator to watch:

• KRAFTBLOCK is an energy storage system that can decarbonize industries like steel, glass or ceramics.

Harnessing Environmental Heat: Solar and Geothermal Energy

Environmental heat sources, such as solar radiation and geothermal energy, offer another pathway to zero-carbon heat. Solar thermal technology concentrates solar radiation onto a heat transfer medium and can produce temperatures high enough for industrial processes. Geothermal technology taps into the heat generated naturally beneath the Earth’s surface. This reliable and dispatchable heat source requires no fossil fuels and has a small land footprint. However, the current level of geothermal energy use remains far below its worldwide technical potential.

Innovators to watch:

• SOLHO develops off-grid renewable energy systems to power horticultural projects
• GA Drilling offers the technology for a carbon-free independent local source of electricity, heating, cooling, clean water and food production, which will set us back on track.
• Canopus has developed a cost-effective drilling technology that improves the productivity of geothermal reservoirs by a factor 2 to 6.

Low carbon Fuels: A Sustainable Substitute

Using low- and zero-carbon fuels and feedstocks minimizes combustion-related emissions in industrial processes. Fuel with a low carbon footprint, such as hydrogen, ammonia, biofuels, and synthetic fuels, can be used to generate process heat, providing a sustainable alternative to fossil fuels.

Innovators to watch:

• OXCCU is focused on converting carbon dioxide and hydrogen into industrial and consumer products.
• Spark e-Fuels develops and operates production facilities for sustainable aviation fuels.
• INERATEC provides modular chemical plants for Power-to-X and Gas-to-Liquid applications and supplies sustainable fuels and products. 
• GAFT develops sustainable aviation fuel committed to using the waste spewing out of the smokestacks of heavy industry.
• Arcadia eFuels is dedicated to constructing facilities that will produce the world's future fuels.

Carbon Capture, Utilization, and Storage (CCUS): A Bridge to a Cleaner Future

CCUS is a multi-component method of capturing carbon dioxide (CO2) from a point source and utilizing it to manufacture value-added goods or storing it to avoid release. CCUS technology decarbonizes without disrupting industrial processes. It is suitable for multi-sectoral applications, especially energy-intensive ones, but requires capital-intensive infrastructure investments.

Innovators to watch:

Concrete4change is an innovative solution to use captured CO2 from industrial sources to strengthen concrete (and store C02).

Greenlyte  develops and markets a novel low-temperature carbon capture technology operating at high energy efficiency with both CO2 and Hydrogen as end products.

Policy Signals

Decarbonizing industrial heat can unlock significant benefits. These include a cleaner and healthier environment, more affordable energy costs for consumers and businesses, increased energy resilience and security, infrastructure investments, and significant job creation. 

Realizing these benefits depends on policy frameworks that are ambitious enough to meet emission-reduction goals rather than incremental policies. This would provide stable planning and investment signals to incentivize the broad deployment of clean industrial heat. 

To make clean industrial heat the norm, policymakers could consider five key priorities:

• Establish a comprehensive and integrated financial and fiscal strategy, creating a stable and long-term favorable investment environment. Significant investments are still required for the wide deployment of clean industrial heat. Financial incentive schemes in the form of grants, guarantees, tax credits facilitate the overcoming of market barriers and speed up the transition process in the industrial sector. For instance, in the US, the IRA’s tax-credit will be beneficial for industrial heat. How?  Taking green hydrogen as an example. By lowering the market price of green hydrogen, it would allow hydrogen producers to compete more effectively with other fuels and electric heating sources, in the case of industrial heat.
• Create lead-markets for clean industrial heat applications. A business case is needed to make an investment decision towards low-carbon processes and products viable. Green public procurement can help reduce the financial risk companies face when scaling up production. The European Commission’s Net Zero Industry Act, part of the EU’s Green Deal Industrial Plan, requires among other things public authorities to consider sustainability and resilience criteria for net-zero technologies in public procurement or auctions. While this is a step in the right direction, the EU needs to systematically strengthen the implementation of green public procurement through clearer incentives for buying clean. 
• Develop an enabling regulatory framework for geothermal. Following the revision of the EU’s renewable energy rules, each Member State would be required to set an indicative target of at least 5% of new renewable installed capacity for innovative renewable energy. While this is good news for geothermal, it is not accompanied by a strategy on how to accelerate deployment, develop and maintain high environmental standards and  de-risk private investments. With the EU Solar Strategy calling for at least a three-fold increase in the energy demand covered by both solar heat and geothermal, the 2030 targets proposed by the Commission, putting forward a comprehensive geothermal strategy is necessary.
• Set the regulatory conditions for renewables-based electrification as the natural choice for industry. In sectors like cement, steel and chemicals, where direct electrification is not possible due to financial or technical constraints, renewables-based indirect electrification, notably renewable hydrogen, will drive decarbonization. Some actions to enable renewables-based indirect electrification include: closing the cost gap between fossil and renewable hydrogen, and avoiding public spending in infrastructure incompatible with a renewable electricity-based energy system.
• De-risk investments in clean industrial heat through public guarantees. Companies often shy away from procuring clean industrial heat solutions, since they perceive them to be not de-risked enough. For this reason, they tend to procure fossil-based solutions which are perceived less risky and thus lock themselves into another 10-15 years of fossil fuel burning. One way to de-risk investments in clean industrial heat is through the provision of public guarantees to mitigate the buyer’s risks in purchasing this equipment.

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Sources

1. Vine, D. & Henderson, C. CLEAN HEAT PATHWAYS FOR INDUSTRIAL DECARBONIZATION.
2. Electrifying Industrial Heat: A Trillion Euro Opportunity Hiding in Plain Sight. Ambienta Sgr S.p.A. https://ambientasgr.com/electrifying-industrial-heat-a-trillion-euro-opportunity-hiding-in-plain-sight/ (2023).
3. Madeddu, S. et al. The CO ₂ reduction potential for the European industry via direct electrification of heat supply (power-to-heat). Environ. Res. Lett. 15, 124004 (2020).
4. IEA (2017). Renewable Energy for Industry.
5. IEA (2018). Clean and efficient heat for industry

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