Pic: Yuichiro Chino / Moment via Getty Images
Green Energy: Analysts eye industrial heat as the next big challenge in meeting net zero targets
Energy
share
Work must be started now to make renewable sources of industrial heat cost competitive in the world’s 20 biggest economies, according to new research from Bloomberg NEF and the World Business Council for Sustainable Development.
Industrial heating looms as one of the biggest challenges for global economies to overcome to reach ambitious net zero targets, which are likely to get more so as the COP26 climate dialogue in Glasgow approaches in just two months’ time.
The electrification of transport and the in tandem decarbonisation of electricity grids to achieve this is one important part of the equation.
But BNEF and the WBCSD have laid bare the challenge facing 20% of the world’s 2000 largest public companies with combined sales of US$14 trillion, who by March this year had committed to net zero targets.
They say sourcing low-carbon heat looms as the “next big hurdle” for businesses in G-20 countries who account for 80% of fuel use in industry.
Industrial processes accounted for 7.5 metric gigatons of CO2 emissions in 2016, equivalent to 15% of all greenhouse gas emissions and the total emissions from the transport sector.
According to BNEF and WBCSD, the most important step will be supporting regulatory policies that lower investment hurdles to wean light and heavy industries off their reliance on fossil fuels.
“The challenge for renewable heat is largely economic. Generating industrial heat with fossil fuels is cost competitive in most markets today, while renewable options come with a price tag,” WBSCD business analyst Isabel Harrison said.
“Our colleagues at IRENA estimate that for industry to achieve their 1.5 degrees scenario around US$3.7 trillion worth of investment will be needed to support the development of low carbon fuel sources across all industrial processes by 2050.
“They estimate that over half of that investment will be in electrification and because renewable heat options often come with a higher up front cost and long payback period, supportive regulatory environments that lower investment hurdles, such as off balance sheet financing mechanisms will be key.”
What needs to shift to renewable heat and how?
Two of the major concerns about shifting industrial processes to renewables is the incredibly intense heats needed for some processes that require heat levels of up to 2000 degrees Celsius, and the cost of renewable options against fossil fuels.
It is needed to not only to transform metals into products like steel and consumer goods like cars, but also to complete other industrial tasks like pasteurising milk, brewing beer and drying paper, areas which tend to dominate low and medium heat demand.
This type of industrial heat made up 53% of demand in 2018, led by the chemical sector.
Focusing solely on low and medium heat application up to 400 degrees Celsius, the report authors say six economies in the G-20 – China, Germany, Italy, South Korea, France and the UK – are best placed to decarbonise the sector in the coming years.
Australia is in the next tier down, but ahead of major emitters like the USA, India and Indonesia, who have little to no policies to adopt renewable heat.
According to figures from the International Renewable Energy Agency around 65% of the $US3.7 trillion investment required could be made in electrification, but the other 35% will be trickier.
It will rely on less established or more difficult to adopt technologies like solar thermal (23%), geothermal (2%), and biomass energy (9%).
The researchers see future solutions being discussed currently like green hydrogen heading largely into high heat applications.
