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Electrification and Alternative Fuels Solutions
Chapter I – Electrification and Alternative Fuels

Electrification and Alternative Fuels

High Concentrating Photovoltaic (CPV) panels, mounted on dual-axis tracking racking systems. Fresnel lenses in the panels concentrate sunlight that is then converted into electricity by photovoltaic cells. Source: National Renewable Energy Laboratory

Energy efficiency improvements lower the overall energy demand of various products and processes. The next piece of the puzzle is reducing the dependence on fossil fuels to meet energy demands. Large amounts of fossil fuels are currently being used for various purposes such as heating and cooling of homes and businesses, for manufacturing and production of steel, chemicals, and cement, and for most modes of transportation. A successful economy-wide decarbonization relies on end-use sectors (i.e. buildings, industry, and transportation), being modified to run on renewable power and heat. In most cases this will require those sectors to transition en masse to meeting energy demands not through the direct combustion of fossil fuels, but through electrification or alternative low-carbon fuels.

Chapter II – Building Sector

Building Sector

Cornerstone Church with a roof-top solar photovoltaic system. Source: National Renewable Energy Laboratory.

The building sector, which includes residential and commercial structures, is responsible for 39% of the total U.S energy consumption (EIA, 2019) and 21% of annual U.S. direct and indirect greenhouse gas (GHG) emissions (1.4 GtCO2e/yr) (EPA, 2019). Globally, buildings and their construction are responsible for over 33% of global final energy consumption and nearly 40% of total direct and indirect CO2 emissions globally (IEA, 2020). The U.S. Energy Information Administration (EIA) projects that global energy consumption in buildings will grow by 1.3% per year on average from present day to 2050, with non-OECD countries having five times the rate of growth compared to OECD countries (EIA, 2019). Rapid emissions reductions can be achieved in this sector through electrifying building processes, while concurrently transitioning to a power sector supplied by renewable energy sources.

The major energy demands of residential and commercial buildings are heating, appliances, cooling, lighting, and cooking. In the U.S., these processes are currently powered equally by electricity (lighting, appliances, some heating/cooling and cooking), and natural gas (space heating, water heating, space cooling, and cooking). There is a great deal of potential to rapidly decarbonize the building sector because those thermal processes currently powered with natural gas could be electrified using existing technologies.

U.S. energy use in buildings, by fuel type, in a net zero policy pathway. Source: Data from the U.S. Energy Policy Simulator 2.0.0. Energy Innovation

Electrifying Thermal Energy

Energy-star rated Heat Pump Water Heater, with its final plumbing configuration and flow meter. Source: National Renewable Energy Laboratory

Space and water heating account for nearly 50% of energy consumption in buildings. In the 2010s, 85% of residential heating loads and 65% of commercial building heating loads across the globe were satisfied by fossil fuels. Space heating is currently the largest source of non-electric demand in the U.S. building sector, accounting for approximately 70% of non-electric energy consumption in the residential sector, and 60% in the commercial sector (Deason et al. 2018). Water heating and cooking account for much of the remainder of emissions. 

An efficient alternative to fossil fuel-powered HVAC equipment for heating and cooling needs are electric air source heat pumps (ASHPs) (learn more about how they work). ASHPs are technologically mature, powered by electricity which can be decarbonized through the use of renewable power, and relatively easy to install in new construction or retrofit in existing systems. As discussed in the Efficiency Improvements section, they are more efficient than conventional systems and so are less expensive to operate, albeit typically more expensive to install than standard equipment. Future decarbonization scenarios show indicate ASHPs will be a leading heating technology in future, as opposed to other direct electrification technologies (electric space heaters or electric resistance heaters), or indirect electrification technologies (e.g., synthetic gases in gas heaters or gas pumps) (Ruhnau et al. 2019, Jadun et al. 2017).

Electric ASHPs have been used in many parts of the world extensively but until recently have been scarcely implemented in areas with prolonged winters with subzero temperatures. The Department of Energy (DOE), however, has identified that the technology has transcended this cold winter limitation, making it suitable for colder regions like the Northeast and Midwest U.S. One remaining challenge of widespread adoption of ASHPs is that while the energy input can be decarbonized, the refrigerants used in ASHPs have very high Global Warming Potentials (GWPs). 

Ground source heat pumps (GSHPs) work using a similar thermodynamic principle as ASHPs but use the heat below the earth’s surface. Below ground temperatures are fairly stable and the temperature flux is sufficient to power a refrigerant cycle. GSHPs have limited implementation potential, though, owing to below-ground conditions being hyper location specific (IRENA), space constraints, and zoning barriers for GSHP installation in residential and commercial buildings. While geothermal systems costs have been historically high, there are several use cases today that show competitive economics, such as an installation at the State Capitol in the U.S. State of Michigan which has an estimated payback period of less than 7 years.

Related AGCI Resource:

Water heating is another thermal process currently met largely with natural gas-powered equipment, but with enormous potential for electrification. Both air and ground source heat pumps can heat water two to three times more efficiently than conventional electric resistance water heaters, and can be retrofitted to work with a conventional storage water heater (DOE, 2020). Tankless or demand-type water heaters are another efficient option because they avoid the standby heat losses that storage water heaters have, and can be powered by electricity (DOE, 2020). Solar water heaters are a great option in high-sun exposure geographies, but might need to be supplemented with another type of heating source in areas with more intermittent exposure. They can be 50% more efficient than regular gas or electric water heaters and last many more years. This resource explains in detail how they work, where they work best, and other considerations. Drain-water heat recovery is a technology that recovers heat from used hot water (from showers or dishwashers, for example) for later use. It complements any heating technology and has a payback range between 2.5-7 years.

This DOE infographic provides a helpful comparison of different water heating technologies. 

Chapter III – Industry Sector

Industry Sector

Vertical Processing Facility at NASA Kennedy Space Center Industrial Area. Image source: NASA.

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).

Related AGCI Resource:

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). 

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Chapter IV – Transportation Sector

Transportation Sector

An electric vehicle (EV) charging station sourcing renewable energy from the solar photovoltaic array, and two plug-in hybrid electric vehicles (PHEV) parked by its side. Source: Envision Solar Intl., Inc.

Transportation accounts for 27% of energy use in the U.S. (EIA, 2019) and is the largest contributor of greenhouse gases, accounting for 28% of U.S. emissions (EPA, 2019). Globally, transportation accounts for 19% of end-use energy consumption and 14% of global emissions (EPA, 2019). Historically, transportation has relied heavily on fossil fuels. However, the transportation sector is ripe for rapid electrification and reliance on alternate fuels.

Biofuels

Biodiesel can be made from any fat or oil. Current U.S. biodiesel production is primarily from oil from soybeans (such as the ones in the picture) or from recycled restaurant cooking oil. Cleaner burning and renewable biodiesel is most often blended at 20% with petroleum diesel. Source: National Renewable Energy Laboratory

Biofuels are appealing alternatives to fossil fuels given that they are bio-derived and renewable, many of which have lower life-cycle emissions compared to fossil fuels  (EPA, 2020). Examples of biofuels include ethanol (derived from crops like switchgrass, corn, sugarcane, sorghum, and others) and biodiesel (derived from algae, sorghum, canola, and others). Most combustion engine technology does not allow for the sole combustion of bio-derived fuels but they can be mixed with traditional fossil fuels. Examples include E85 which is a 85:15 blend of ethanol and gasoline and B20, which is a 20:80 blend of biodiesel and fossil diesel.

Biofuels involve the cultivation of large amounts of bio-crops which have drawbacks such as:

  • Large land area footprint requirements for cultivation

  • Potential ecological damage due to harmful farming practices and land-use changes

  • Social pressures of growing food crops vs. energy crops, especially in developing nations with growing populations and food security concerns

Policies to promote biofuels should prevent biofuel crop production on land that would naturally regenerate as forests; opt for best practices accounting instead of treating all biomass as a zero-emissions feedstock; and curtail expansion of biofuels produced from food crops or from converting viable cropland into biofuel production (Reid et al. 2020).

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Electric Vehicles

Light-duty electric trucks. Source: National Renewable Energy Laboratory.

Electric light duty vehicles are powered through an electric powertrain. EVs can have significant emission savings when electricity is sourced from renewable or nuclear energy sources. There are multiple kinds of EVs. Non plug-in hybrid EVs are powered by an internal combustion engine and an electric motor, which uses energy stored in batteries (which are only charged through regenerative braking and by the internal combustion engine), therefore resulting in better fuel economy than standard gas-powered vehicles. Plug-in hybrid EVs have an electric powertrain with a plug-in rechargeable battery and a standard internal combustion engine. The electric powertrain usually has smaller mile ranges between 20-30 miles/charge, sufficient for many trips within city limits. Battery electric vehicles (BEVs) have only an electric powertrain and have a large battery on-board, allowing for longer ranges often in the hundreds of miles/charge.

There are several barriers to the adoption of EVs including cost and range anxiety. The Union of Concerned Scientists published a report summarizing the barriers to adoption and identifies market action by key automobile manufacturers. Pre-emptive deployment of charging infrastructure helps alleviate range anxiety that customers face, and could be achieved through robust public-private partnerships.

It is important to consider that currently in the U.S. alternative vehicles and especially electric vehicles are priced higher than traditional internal combustion engine vehicles and are not accessible across U.S. socio-economic strata. A report by Puget Sound Energy elucidates the barriers to EV adoption and success stories are highlighted such as the BlueLA EV car sharing program for underserved communities. The International Council on Clean Transportation (ICCT) estimates that in the U.S. electric vehicle initial cost parity is coming within 5-10 years (ICCT, 2019). This is mostly driven by continuous reductions in battery costs and scale improvements. 

Comparative ownership costs over time of different vehicles (EVs with a range of  150, 200, and 250 miles, a plug-in hybrid with an electric range of 50 miles, and a conventional vehicle) through three different types of vehicles: car, crossover, and sport utility vehicle (SUV). Cost parity for battery electric vehicles and conventional vehicles is projected within the next 5-10 years. Source ICCT, 2019.

Vehicle to Grid

Electric Vehicle Grid-Integration research is done at the Vehicle Testing and Integration facility (VTIF) at NREL in Golden, Colorado, U.S.A. Source: National Renewable Energy Laboratory

In addition to providing a means for carbon-free transportation, EVs also have the potential to fill an energy storage function within the electricity grid. Research has shown that passenger vehicles are parked 95% of the time. When not in use, EVs can act as stationary storage devices supplying electricity to the grid – a process known as vehicle to grid or V2G. There is significant decarbonization potential in doing so, especially when EVs have been charged by renewable electricity and when the energy supplied by EVs helps avoid the dispatch of gas powered peaker plants. 

V2G helps reduce overall grid emissions and lower electricity costs. Thus EV fleet owners can derive revenue through providing storage services to the grid. The Los Angeles Air Force Base carried out a pilot V2G study to estimate the value proposition of providing grid services and they identified earnings equaling $100-$150/vehicle/month. Such revenue can make owning EVs cheaper. However, an important fact to consider is that the increased number of charge-discharge cycles can hamper the longevity of the EV battery life. 

Buses and Heavy Ground Transport

GreenPower Bus, an all-electric double decker bus. Electric buses are more expensive than traditional ones, but several cities around the world are adopting them since they emit zero emissions at the tailpipe, require less maintenance than traditional buses, and are a lot quieter. Source: National Renewable Energy Laboratory.

Electrification of public transportation, and especially buses, would come with local air pollution and noise abatement benefits. The market for electric buses globally is quite nascent at present.  China is the most developed electric bus market with a global market share of 99% (Greenbiz, 2019).

The biggest hurdle to widespread adoption of electric buses is currently the underlying economics, represented by the Total Cost of Ownership (TCO). The TCO of electric buses are 50-160% more than ICE buses depending on the modality of charging. Much of this is due to initial capital cost, infrastructure costs (to set up robust charging networks to ensure seamless operation of electric buses), and maintenance costs (including battery replacements). 

Overnight charging results in long periods of idle time resulting in a larger TCO, but opportunity charging - which involves charging strategically for short intervals along the bus route - can enable 24/7 operations and reduces the TCO (Mahmoud et al., 2016). Electric buses can also serve as an important V2G energy storage resource. Electric school buses are likely to be operated as part of a fleet and would have defined routes for daily travel thus increasing the predictability of being available to provide grid storage services while idle (especially during off-peak summer months when grid peak demand is typically highest (GTM Research, 2019). 

Like buses, semi-trucks present both challenges and opportunities to power through alternative means, including electrification via batteries, overhead power lines, as well as hydrogen and other renewable energy carrier fuels. Some of these technologies are not far off, while others (such as direct electrification, with the greatest potential to mitigate GHGs), will require substantial infrastructure investments before they can become mainstreamed. Researchers have been exploring the most promising low carbon technologies.

Battery technology is critical for electrification of buses, and especially long-range heavy duty trucking. Batteries are currently too expensive and too large to compete in the market. In cases such as these, hydrogen can play a massive role in decarbonizing such transport. Hydrogen-powered fuel cells on board vehicles can help generate electricity to power the drivetrain, with relatively harmless tailpipe emissions. Emissions can be further curbed by using “blue hydrogen” or “green hydrogen” produced using renewable energy.

Levelized Cost of Driving comparison between BEV medium/heavy duty and bus. The three projected scenarios reflect futures with qualitatively different investment in and improvement of electric technologies cost and performance. The Slow Advancement cases represent futures where electrification follows current trends without major advances, whereas the Rapid Advancement projections are consistent with futures in which public and private research and development (R&D) investment in electric technologies spurs technology innovations, manufacturing scale-up increases production efficiencies, and consumer demand and public policy yields technology learning. The Moderate Advancement projections fall between the Slow and Rapid projections, reflecting electric technology progress beyond current trends. Source: Jadun, et al. 2017. Electrification Futures Study: End-Use Electric Technology Cost and Performance Projections through 2050. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-70485. https://www.nrel.gov/docs/fy18osti/70485.pdf.

Aviation & Shipping

NASA’s all-electric X-57 Maxwell plane being delivered in two parts, with the wings separated from the fuselage. This crewed X-plane seeks to further advance the design and airworthiness process for distributed electric propulsion technology for general aviation aircraft. Source: National Aeronautics and Space Administration (NASA)

Aviation and shipping, like heavy ground transport, require high energy density fuel to allow for long-distance travel. Alternative low-carbon fuels have been seen as the most promising avenue to lower emissions associated with air travel (as opposed to electrification with batteries). One alternative outlined by the Kleinman Center for Energy Policy at University of Pennsylvania is a carbon-neutral hydrogen jet fuel, which relies on hydrogen produced using carbon capture and storage or electrification in fuel production/electrolysis processes, and negative emissions technologies to offset airline flying emissions. Making low-carbon fuels economical remains an obstacle. Design, operations, infrastructure, socio-economic and policy measures will be key factors in decreasing aviation emissions (Singh et al. 2017).

Just as biofuels have been explored for ground transport, they are also being considered for aviation and maritime shipping. High energy and non-edible crops like algae, camelina, and jatropha are all being experimented with to make jet fuel, either as direct biofuel, or as bio-synthetic paraffinic kerosene. To date, progress has been made in developing these fuels as additives to jet fuel blends, but they have not reached a point where they can altogether replace jet fuel (Yilmaz and Atmanli, 2017). 

The promise of alternative fuels ultimately lies in if fuel quality can improve, while keeping costs down and maintaining sustainable feedstocks, conversion technologies, and co-product allocation. Biofuels coupled with energy efficiency improvements in maritime shipping design and operation, could account for an 85% drop in global shipping emissions by 2050, assuming carbon-neutral feedstock sourcing (Bouman et al. 2017).

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