Vertical Processing Facility at NASA Kennedy Space Center Industrial Area. Image source: NASA.
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The industry sector accounts for almost a third of energy consumption in the United States (EPA, 2019), and upwards of 50% globally (EIA, 2019). The Industrial sector also accounts for 22% of emissions in the U.S. (approximately 2 GtCO2e in 2019), and a third of emissions globally (approximately 11 GtCO2 in 2019). A large portion of these emissions comes from industrial production processes such as iron and steel production, chemical production, petroleum refining and other manufacturing and non-manufacturing activities which are vital to most nations’ economic well-being. 

Decarbonization of the industrial sector is farther behind other sectors. Industrial processes and their products have distinct roadblocks to electrification and powering them with alternative fuels (Columbia SIPA, 2019):

  1. Industrial processes often require high temperature and high quality heat. For example, chemical processing and paper manufacturing requires temperatures between 200-400ºC, and heavy industrial operations such as glass and cement production require temperatures above 1500ºC. There are limited alternative sources of fuel that can meet these requirements.
This chart from ICEF shows the temperatures that alternative thermal energy sources can produce and consequently, which industrial processes they can be applied to. Most of these options are currently cost-prohibitive (Columbia SIPA, 2019).
  1. Industrial equipment is built to last for 50-60 years. Industrial facilities have large invested capital and retrofitting or abandoning them would be uneconomical, especially for facilities constructed in the last two decades (Roberts, 2019).
  2. Industrial products are widely traded across geopolitical boundaries, and therefore must be cost-competitive domestically and internationally. Investments in alternative fuels, processes, or infrastructure can increase product prices, and hamper cost-competitiveness with other companies. 

Despite these challenges, there are many opportunities to transition the highly heterogeneous industry sector to a low-carbon future. 

ELECTRIFICATION

Hot strip mill for steel production powered by electricity. Source: Bethlehem Steel

Fewer than 30% of industrial processes currently run on electricity, meaning the industry sector currently relies primarily on the combustion of fossil fuels. The vast majority of fuels go toward fueling boilers (46%) and process heating (41%), making these heating needs a priority for electrification (and in turn, powering with renewable energy).

Distribution of energy end-uses in the U.S. manufacturing sector in 2014. The top bar shows end uses of electricity (including site-to-source losses) and the bottom bar shows direct combustible fuel use. Source: U.S. Energy Information Administration. Manufacturing energy consumption survey; 2014.

Electric heating systems can be controlled using fine temperature control and potentially used to power process heating requirements. Electrical heating systems are classified into direct heating, indirect heating, microwave heating, induction heating, electric arc heating, or radiative heating. Some process heating needs are prime for electrification, while many others are currently not cost-competitive compared to traditional fossil fuels. Electrification of process heat in these facilities would require significant and costly overhaul of facilities and infrastructure, as well as higher operational costs. 

Electrification of process heat applications, if applied on a large scale, could also place a massive burden on the electric grid posing potential reliability challenges if not planned for correctly.

Increasing electrification in the manufacturing industries is crucial for reducing dependency on fossil fuel combustion and carbon emissions from the sector. This resource provides useful insights on how the industrial electrification pathway looks like. Source: Global Efficiency Intelligence, LLC.

NET-ZERO EMISSIONS HYDROGEN

Hydrogen is produced using solar-powered electrolysis and natural gas reforming by SunLine Transit Agency in Thousand Palms, California, U.S.A. Source: National Renewable Energy Laboratory

Hydrogen is frequently touted as a valuable energy carrier in high process heat needs. Hydrogen is able to provide versatile, high quality, and a high temperature heat of up to 2,100°C. The majority of commercially derived hydrogen (about 71% worldwide) is currently produced through the Steam Methane Reforming (SMR) process. The SMR process is very carbon intensive, as hydrogen molecules are separated from methane through the application of steam at high pressures and temperatures.

Alternative approaches can decrease emissions of hydrogen production. The first involves combining SMR hydrogen production with carbon capture and storage to reduce emissions. The hydrogen produced through this process is termed “blue hydrogen.” The second, and the least carbon intensive, approach involves electrolysis of water through the use of nuclear or renewable energy. The hydrogen produced through this method is termed as “green hydrogen”. Today, green hydrogen costs between $6-7/kg as opposed to $1-2/kg hydrogen produced through the SMR process (Hydrogen Council). Green hydrogen could become more cost-competitive through carbon policy frameworks that bring about a level playing field for clean energy resources. An alternative way of producing hydrogen through water electrolysis that is gaining research momentum is by using non-marketable energy from nuclear power plants. This approach supports the nuclear plant business model by diversifying its products and revenue streams, while also avoiding the carbon emissions from the SRM process.

Levelized Cost of Hydrogen Production. Source: ICEF

Storage and transport of hydrogen have been barriers to its penetration as a widespread energy carrier. Currently most hydrogen is stored as a compressed air or liquid form, and the processes to condense hydrogen into these forms for transport are very energy intensive. Transport is typically done currently using trucks or pipelines. Due to its smaller molecule size, hydrogen often leaks from existing natural gas pipelines, though they can be utilized if hydrogen is mixed with natural gas, or the pipelines are made from specialized materials. As with natural gas, hydrogen is also highly flammable, which requires added safety precautions.

Industrial processes have the potential to be powered by zero-carbon electricity in some cases, and low-carbon hydrogen fuels in others.

BIOENERGY

Construction of a biomass gasifier of sugarcane residue in Paia, Maui, Hawaii, U.S.A. Source: National Renewable Energy Laboratory.

Agricultural and forest residues, algae, dedicated energy crops, sorted municipal solid waste (waste food, biosolids, other organic wastes, biomass plastics), and wet wastes (manure slurries, sludges) are all biomass sources commonly used for bioenergy applications (DOE, 2020). Like hydrogen, bioenergy can produce high temperature heat to satisfy a number of industrial processes that are difficult to electrify. It is estimated that approximately 55,556-138,889 TWh/year of sustainable biomass energy can be generated by 2050 (European Commission DG Environment, 2010). 

Different bioenergy feedstocks lend themselves to different processes. Wood-chips, for instance, are typically able to satisfy applications such as methanol production, ammonia production, SMR and other processes which require temperatures of 1100ºC or lower. Biodiesel and gasified biomass can satisfy higher temperature applications such as steel manufacturing. Biocarbon can be used as a substitute in the steelmaking process (Hakala et. al 2019). 

Biofuels and bioenergy have a unique role in the coming decades of the energy transition. If policies are well designed to bypass well-known sustainability pitfalls (such as competing with agriculture and biodiversity/habitat needs), that role can sustainably meet niche needs while additional and alternative technologies mature and deploy at scale. The energy justice dimensions of bioenergy crop production must be carefully considered as bioenergy markets grow to ensure that food security and sensitive habitats are not compromised. 

Policies that can promote sustainable biofuel production include accurate and rigorous greenhouse gas accounting systems; favoring biomass sourced from waste or ecosystem improvement strategies (e.g., wildfire risk reduction, growing on low-carbon stock lands that would otherwise be unused); avoiding bioenergy from naturally regenerating forests unless using waste removed for site improvement (and not all logging slash falls under this category); and incentivizing timely replacement technologies (Reid et al. 2020).

CARBON CAPTURE AND STORAGE

Petroleum refinery in Commerce City, Colorado, U.S.A. Source: National Renewable Energy Laboratory 

With progress towards electrification and use of alternate fuels slower in industry than in other sectors, another option to reduce emissions from industry is to retrofit existing facilities with carbon capture and storage (CCS). CCS is a technology that can capture up to 90% of the CO2 emissions pro­duced from the use of fossil fuels in electricity generation and industrial processes, preventing the CO2 from entering the atmosphere. Furthermore, the use of bioenergy with CCS (also known as BECCS) is one of the few carbon abatement technolo­gies that is ‘carbon-negative’ ­– with negative net emissions, actually taking carbon dioxide out of the atmosphere at a greater rate than adding them (CCS Association, 2011). 

CCS allows for core infrastructure in the industry sector to remain relatively unchanged, while creating opportunities for carbon reuse to create products. However, this option still has to prove whether or not it will be competitive from a cost standpoint, and whether or not product creation through carbon reuse will have a sustained demand. More information on CCS is available in the Negative Emissions section.

Comparative cost estimates of various industrial heat sources per unit of energy produced (GJ). Source: Columbia CGEP

This chart from Columbia CGEP shows the comparative cost estimates of all industrial heat sources. The vertical dotted lines signify the range of natural gas prices available today while the blue horizontal bars represent low-carbon heat options for industrial applications. From the chart, it is evident that most low-carbon heat sources, except for nuclear energy based sources, are still very expensive compared to conventional natural gas heating. This demonstrates the clear need for effective policies – fiscal and otherwise – to ensure industry-wide decarbonization.

The suite of policies that would drive electrification and use of alternate low-carbon fuels in the industrial sector would include: carbon pricing, markets and labels for low carbon products, data and disclosure requirements and incentives, fiscal support tools such as tax breaks, public procurement programs, and public R&D funding. Both the ICEF Industry Heat Decarbonization Roadmap and the AGCI workshop paper on technologies and policies to decarbonize global industry highlight specific policy mechanisms required for this transition.

Aside from greenhouse gas reductions, retooling industrial facilities can also reduce other pollutants that cause local environmental harm. This is particularly relevant from an environmental justice standpoint because low income communities and communities of color often live the closest to polluting industrial facilities (Bravo et al. 2016).