How to power up Europe's industrial decarbonisation
Closing the spark spread would be a good start
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Once seen as the ‘Swiss Army Knife’ in the industrial decarbonisation toolbox, green hydrogen (H2) is failing to take-off at the speed many expected.
Only a few years ago green H2 was projected to deliver one-fifth of the industrial emission reduction required under the EU emissions trading scheme by the end of the decade. This optimistic take was based on a ramping up in green H2 supply, and a rapid decline in the cost of production, encouraging uptake among hard-to-abate industrial sectors.
The European Union had hoped to be producing 10 Mt of green H2 by 2030, while also targeting 10 Mt of green H2 imports. Achieving the domestic target alone will require a breakneck increase in electrolyser capacity, requiring 120 GW by 2030. Alas, between 2021 and the end of 2023 only 1 GW per year reached Final Investment Decision (FID) according to PWC, taking the total capacity to 3 GW.
Carbon intensive industries have also found it challenging to reconfigure their production processes to integrate green H2. It’s not a simple switch, and even less appealing given the high cost and uncertain outlook for green H2 supply. In a damning verdict the European Court of Auditors recently called the EU’s green H2 targets ‘unrealistic’ and ‘overly ambitious’1 2
In the absence of a turnaround in the outlook for green H2 industrial adoption, what’s the alternative? Direct electrification of process heat is a potential pathway to industrial decarbonisation, and one that has largely been neglected by policymakers in the headlong rush into supporting green H2.
Process heat refers to the application of heat during an industrial processes. For example, cooking, pasteurising and drying food, melting glass and steel, or firing ceramics. As we’ll see direct electrification faces some significant barriers of its own, potentially making it just as challenging to scale as green H2.
Process heating is the single largest energy use in Europe’s industrial sector, accounting for almost half (47%) of industrial energy demand and three-quarters of industrial CO2 emissions. Fossil fuels account for about 75% of the energy consumed by process heating (primarily natural gas and coal), biomass contributes 15%, while electricity provides a mere 4%!
If it could be electrified it would make a significant dent in overall European emissions - somewhere in the region of 20%!3
