E x t e n d i n g t h e s c o p e o f m i t i g a t i o n o p t i o n s

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1 DECARBONIZING INDUSTRY E x t e n d i n g t h e s c o p e o f m i t i g a t i o n o p t i o n s A n d r e a H e r b s t, T o b i a s F l e i t e r, M a t t h i a s R e h f e l d t I n t e r n a t i o n a l S u s t a i n a b l e E n e r g y C o n f e r e n c e I S E C 3 r d 5 th O c t o b e r , G r a z Copyright: Tetsuo Monta

2 OUTLINE I. Introduction II. III. Methodology Scenarios IV. Results V. Conclusions Seite 2

3 Status-quo: industry accounts for 25% of EU final energy consumption Dominant energy carriers: gas, electricity, coal and oil Challenge: direct CO2 emissions (energy- and process-related) Current policy is not on the right track to decarbonisation and deep emission reductions require significant changes in the sector EU28 industrial final energy demand (2015) EU 28 direct industral emission by type of use (2015) Non-ferrous metals Paper and printing Engineering and other metal 11 % Food, drink and tobacco Other non-classified 23 % 630 Mt. CO 2 -eq. 45% Chemical industry Iron and steel Non-metallic mineral products 21 % _Electricity _District heating _Natural gas _Coal _Fuel oil _Other fossil _Biomass Seite 3 _Waste non-res _Waste RES _Ambient heat _Geothermal _Solar energy Source: FORECAST

4 OUTLINE I. Introduction II. III. Methodology Scenarios IV. Results V. Conclusions Seite 4

5 FORECAST: bottom-up simulation model Seite 5

6 OUTLINE I. Introduction II. Methodology III. Scenarios IV. Results V. Conclusions Seite 6

7 Scenario characterization by mitigation option Clusters of mitigation options REF TRANS-IPT Incremental efficiency improvement Fundamental processes improvement energy efficiency, process emissions Fuel switching to RES towards decarbonized electricity and/or hydrogen Energy efficiency progress according to current policy framework and historical trends. - Fuel switching driven by energy prices and assumed CO 2 -price increase Faster diffusion of incremental process improvements (BAT & INNOV TRL 5). Radical process changes (INNOV TRL 5) High financial support for RES technologies: Stronger fuel switching to biomass, power-to-heat and power-togas technologies. Radical changes in industrial process technologies drive fuel switch (e.g. switch to hydrogen). Carbon capture and storage (CCS) - - Recycling and re-use Material efficiency and substitution Slow increase in recycling rates based on historical trends. Based on historic trends. Stronger switch to secondary production (e.g. electric steel, secondary aluminium). Decrease in clinker factor. Increase in material efficiency & substitution. Seite 7

8 downstream Materials industry Maturity of technologies: Mitigation options (selection) by TRL Technology readiness level -> Clusters of mitigation options Energy efficiency Fuel switch Carbon capture and storage (CCS) and CCU Deep eutectic solvents Waterless paper production Low-carbon Top-gas cement 70% recycling DRI RES Electrolysis DRI RES-H2 Plasma Oxyfuel CCS Black liquor gasification Near net shape casting Electricity for process heat Recycling and re-use Cement from recycled concrete High quality EAF Material efficiency and substitution New raw materials Carbon reinforced (e.g. grass) concrete Seite 8

9 OUTLINE I. Introduction II. III. Methodology Scenario definition IV. Results V. Conclusions Seite 9

10 GHG emissions [Mt CO2-equ] Very high level of ambition enables a high reduction in industrial CO 2 emissions EU 28 industrial CO2 emissions by EC and scenario Natural gas Fuel oil Coal Others Process emissions Challenge process emissions Reference: Slight improvements visible (e.g. process switch in the steel industry) Mitigation scenario: Reduction in industrial CO 2 emissions: ~-70% by 2050 compared to 2015 ~-83% by 2050 compared to Base year REF TRANS-IPT Abatement of process-related emissions more difficult: Radical process changes Source: FORECAST Seite 10

11 Final energy demand [TWh] Two contrary trends can be observed in the evolution of industrial energy demand EU 28 industrial final energy demand by EC and scenario 3,500 3,000 2,500 Waste RES Waste non-res Solar energy Other fossil Natural gas Geothermal Fuel oil Electricity District heating Coal Biomass Ambient heat Mitigation scenario: Demand decreases due to integrated process improvements and fuel switch 2,000 1,500 1,000 Large volumes of renewable electricity will be needed due to radical process changes Base year REF TRANS-IPT Trans-IPT scenario: 1144 TWh of electricity in 2050 (+15% compared to 2015) Source: FORECAST -25% (3233 to 2430 TWh) Seite 11

12 [TWh] Strong shift towards biomass and electricity for process heating via fur naces EU 28 final energy demand for process heating in furnaces Waste RES Waste non- RES Biomass Electricity TRANS-IPT scenario: High financial support for biomass Other fossil Fuel oil Natural gas Biomass is used where technically possible (e.g. cement & lime) Coal Increase in electricity driven by radical changes: e.g. the use of hydrogen in steel production replacing BOF Across all sectors and scenario still a substantial amount of natural gas is used Chemical industry Iron and steel Non-metallic mineral products Source: FORECAST Seite 12

13 OUTLINE I. Introduction II. III. Methodology Scenarios IV. Results V. Conclusions Seite 13

14 Transition scenarios show that industry can reduce its CO2 emissions drastically Deep emission cuts require substantial changes in the iron and steel, cement and chemicals industries, but also support for RES and energy efficiency in other sectors and companies. Radical shifts in steel and chemicals towards the use of RES-hydrogen might increase electricity use drastically. Biomass is the an important RES in industry, particularly in the medium term. Biomass resource potentials and their sustainability are limited (competition with other sectors). RES-based electricity (PtH) can play a more important role, particularly if electricity generation has very low emission levels. However, electricity is not yet cost-competitive with biomass even in the most ambitious transition policy scenario. Replacing biomass by electricity would require policies to reduce the operation costs of PtH. Improved material efficiency and the circular economy have a huge mitigation potential. Still unclear what an effective policy mix would look like and this probably encompasses a wide range of individual measures. Seite 14

15 Policy mix needs to be adjusted in order to effectively support R&D activities Extending the ETS with a minimum price path (i.e. a floor price) could provide more longterm clarity and the certainty needed for investors in low-carbon innovations. Public RD funding will be necessary to accelerate the market introduction of innovative lowcarbon processes (e.g. Innovation Fund). Targeted public procurement can support the market introduction of low-carbon products by establishing niche markets. CO2 tax as the central element of a broader energy tax reform could provide the incentives needed for fuel switching (especially for companies outside the ETS). Increase policies to boost material efficiency and a circular economy (e.g. evaluate building codes and regulative framework in construction to facilitate efficient (re-use) of materials). Implement policies to overcome barriers to energy efficiency (energy management schemes, audits, soft loans, and energy service market). Seite 15

16 Decarbonizing industry: Extending the scope of mitigation options Many thanks for your attention! Dr. Andrea Herbst Competence Center Energy Technology and Energy Systems Fraunhofer Institute for Systems and Innovation Research ISI Breslauer Straße 48, Karlsruhe, Germany Tel.: +49 (0) The analysis was executed within the EU project SET-Nav (Navigating the Roadmap for Clean, Secure and Efficient Energy Innovation), which received funding from the European Union s Horizon 2020 research and innovation programme [GA-No ]. For further information, see: Seite 16