Renewable energy offers cost-effective options to cut carbon emissions from industry

Reducing long-term greenhouse gas (GHG) emissions in the industry sector is one of the toughest challenges of the energy transition. Combustion and process emissions from cement manufacturing, iron- and steelmaking, and chemical production are particularly problematic.

But there are a variety of current and future options to increase the uptake of renewables as one possible way to reduce industry sector energy and process carbon dioxide (CO₂) emissions, which we examine in detail in a new IEA Insight Paper, Renewable Energy for Industry.

The main finding is that the recent rapid cost reductions in solar photovoltaics (PV) and wind power may enable new options for greening the industry, either directly from electricity or through the production of hydrogen (H)-rich chemicals and fuels. Simultaneously, electrification offers new flexibility options to better integrate large shares of variable renewables into grids.

Some regions have particularly abundant and cheap renewable resource, such as Australia, the Horn of Africa, North Africa, northern Chile, southern Peru, Patagonia and South Africa, as well as several regions in China and the Midwestern United States. Hydrogen-rich chemicals and fuels could be produced from these regions and shipped to large consumption centres, creating new types of international energy trade.

Beyond the production for current industrial uses, green hydrogen and ammonia could also reduce CO₂ emissions associated with iron and steelmaking. Hydrogen and ammonia could serve as energy carriers for other uses, notably in industrial furnaces and balancing power plants. Drop-in hydrocarbon fuels and many chemicals could also be produced associating green hydrogen and recycled carbon from fumes or the air.

If these new applications of solar and wind power were applied to current levels of production, several terawatts of solar and wind capacities would be needed. These capacities would largely be additional to those that have already been factored into the IEA’s long-term low-carbon scenarios.

Overall, a combination of direct process electrification and use of storable hydrogen-rich chemicals and fuels manufactured from electricity may offer the greatest potential for renewables uptake by various industries. Nevertheless, the analysis also considers options for direct renewable heat, and describes the recent progress made in particular for using solar heat in extractive industries.

Finally, we investigate the policy options for promoting these new applications of renewable energies to industries, in particular ways government could use to level the playing field, promote a greater use of renewables, and prevent unfair competition, including border-tax adjustments and standards. Meanwhile, public and private procurement might play a prominent role in facilitating the development and deployment of cleaner renewable-based industrial processes in the years to come.

The report was first presented in Beijing to the China’s Economic Information Service of Xinhua News Agency on November 9, and will be also highlighted at the COP23.