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Industry

Electrify industry

The industry sector is highly energy intensive, mainly because many industrial processes are reliant on heat. Direct greenhouse gas (GHG) emissions from fossil fuel combustion in industry generated 7.1 gigatonnes of carbon dioxide equivalent (GtCO2e) in 2019. But by sourcing that energy from electricity, which can be generated from renewable sources, GHG emissions can be substantially mitigated.

To achieve our climate goals, we need to move quickly to electrify industrial energy generation and decarbonize the power supply. Because the electrification of industrial heat does not yield energy efficiency gains, electrification only makes sense when it’s coupled with the decarbonization of the power supply. However, the promotion of electrification at an early stage can reduce the risk of locking in fossil fuel-based heating technologies, even when the power supply is not yet decarbonized.

Technologies to electrify low- and medium-temperature heat are already commercialized

Most electrification in industry has focused on non-heating machinery such as pumps, robotic arms and conveyor belts, but generating low- and medium-temperature heat (up to 1000 degrees C, or 1832 degrees F) electrically is commercially feasible, and the electrification of heat generation holds significant potential for decreased emissions. Existing technologies could electrify almost half of the energy use in the industry sector today.

Some of the main barriers to electrification are economic — namely, the price of fuel and the capital cost of equipment. Switching to electric power makes economic sense when electricity is cheaper than the fuel used in conventional equipment, but this is currently not the case in most places.

This being said, the declining cost of renewable electricity, a price on carbon and/or removal of fossil fuel subsidies, and research and development to improve the energy efficiency of electrical equipment could enable a shift to widespread electrification throughout the industry sector. 

Accelerated technical development and commercialization is needed to electrify high-temperature heat 

A separate challenge is electrifying high-heat processes (above 1000 degrees C, or 1832 degrees F). Although this is technically possible, it will require increased efforts in technological development, pilots and demonstrations, as well as considerable investment and policy support.

Other approaches are possible. For instance, industrial thermal batteries running on clean electricity can provide heat for industry and novel electricity-based technologies could reduce the need for high-temperature heat in steel production. Sustainable biomass and other low-carbon fuels could be sources for high-temperature heat. However, these resources are limited in supply, meaning that electrification will remain an important part of decarbonization.

Data Insights

What targets are most important to reach in the future?

Systems Change Lab identifies 2 targets toward which to track progress. Click a chart to explore the data.

What factors may prevent or enable change?

Systems Change Lab identifies 5 factors that may impede or help spur progress toward targets. Click a chart to explore the data.

Progress toward targets

Systems Change Lab tracks progress toward 2 targets. target. Explore the data and learn about key actions supporting systems change.

Share of electricity in the industry sector's final energy demand

The share of electricity in the industry sector’s final energy demand grew from about 28% to 29% between 2017 and 2021. This rate of change needs to accelerate fourfold to reach the 1.5 degrees C-aligned target for 2030.

Many current industrial processes are highly dependent on fossil fuels. Shifting to electric technologies can reduce this reliance and limit energy-related emissions from industry.

The share of electricity in the industry sector’s final energy demand grew from about 28% to 29% between 2017 and 2021, an increase of 1.6% per year on average. If the trend continues, the global electrification rate will be off track to achieve the near term-target of 35% by 2030. To reach the 2030 target, this rate of change will need to accelerate fourfold.

Share of low- and medium temperature heat that is electrified

Historically, electrification in the industry sector has targeted non-heating industrial operations. However, in the near term, there is room for greater electrification by focusing on low- to medium-temperature heat, only a small share of which has been electrified to date.

Although the technologies for the electrification of high-temperature heat processes are still under development, low- and medium-temperature heat electrification technologies already exist and could be commercially adopted.

Historically, electrification in the industry sector has targeted non-heating industrial operations, including machinery such as pumps, robotic arms and conveyor belts. This has allowed the rate of electrification to grow at a steady pace. But there is room for greater electrification in the near term, because only a small share of low- to medium-temperature heat has been electrified to date.

Due to the lack of data and appropriate Paris Agreement-compatible targets, we cannot calculate an acceleration factor or evaluate whether or not this indicator is on track.

Enablers and barriers

We also monitor change by tracking a critical set of 5 factors factor that can impede or help spur progress toward targets. Explore the data and learn about key actions supporting systems change.

Number of countries with policies supporting electrification in industry

The electrification of industrial energy demand requires companies to invest in existing technologies and in the development of new ones.

The electrification of industrial energy demand requires companies to invest in existing technologies and in the development of new ones. Though technologies for the electrification of low- and medium-temperature heat are already available, new technologies for the electrification of high-temperature heat still need to be developed.

This transition entails additional costs unless the old technology stock has reached the end of its operational lifetime. Therefore, policies supporting earlier adoption of electric technologies can speed up the transition, and policies that encourage faster development of new technology can bring down the costs of transition since companies can align the shift to new technology with the end of life of old technology. There is currently no comprehensive data available on this indicator.

Number of demonstrations, pilots and patents for commercializing technology to electrify high-temperature heat in industry

Electrification of high-temperature heat — which could significantly lower emissions if coupled with the decarbonization of the electricity supply — is technically possible, but is still in the early stages of development.

Some industrial processes, such as cement and steel production, require high-temperature heat, which traditionally is generated by the combustion of solid fuels. Electrifying that heat could significantly lower emissions if it is coupled with the decarbonization of the electricity supply.

Electrification of high-temperature heat is technically possible but is still in the early stages of development. It needs further development and piloting to be used at commercial scale. Examples such as industrial thermal batteries need policy support for reaching scale. Others, such as ongoing research to electrify cement kilns, aim to demonstrate the technology and put it in commercial use by 2024.

Tracking the number of demonstration projects indicates the extent to which industries are pursuing this technology, but there is currently no comprehensive data available on this indicator.

Research and development spending on the electrification of high temperature heat

The electrification of high-temperature heat will be particularly important in industries where alternatives that use lower-temperature heat are challenging to implement, such as in cement and steel production.

Although the electrification of high-temperature heat (above 1000 degrees C, or 1832 degrees F) is technically feasible, it is still in the early stages.

The electrification of high-temperature heat will be particularly important in industries where alternative production processes that utilize lower-temperature heat are challenging, technically and structurally, to implement, such as in cement and steel production.

To speed up its development, increased investment in research and development (R&D) is required. By tracking that spending, we can get an idea of progress toward solutions and whether spending levels are sufficient.

There is currently no comprehensive data available on this indicator.

Number of industrial companies setting electrification targets

There is currently no comprehensive data available on industrial companies setting electrification targets, but there are signs that industrial manufacturers are increasingly aiming to accelerate their electrification rates.

In addition to government policies, companies can set their own targets to increase the electrification rate. These targets can contribute to an increased ambition loop and generate greater momentum for electrification in the industry sector. If companies commit to targets that are more ambitious than the policies currently in place, they can accelerate progress even more.

A commitment to increased electrification rates can send a clear signal to the rest of the industry, feeding the ambition loop. By tracking the number of companies that are setting electrification targets, we can get a clearer picture of how the transition is unfolding.

There is currently no comprehensive data available on this indicator, but there are signs, such as an increasing number of companies publishing sustainability reports that highlight electrification, that industrial manufacturers are increasingly aiming to accelerate their electrification rates.

Price of fuel (electricity, coal, oil, natural gas)

The price of electricity relative to that of heating fuels is one of the main barriers to further electrification of industry. By tracking and comparing prices, we can analyze how far from price parity we are.

The price of electricity relative to that of heating fuels is one of the main barriers to further electrification of industry. Narrowing the difference in operational costs between providing heat with electricity rather than with fossil fuels — through tax exemptions and cross subsidies, for instance — is critical to making the electrification of heat economical. By tracking and comparing prices, we can analyze how far from price parity we are.

Once electricity becomes cheaper than other fossil alternatives, the switch to electric equipment could make more economic sense for companies and might require fewer supporting policies. Further, to the extent that this electricity comes from renewable sources, it can lead to significant emissions reductions. The cost of electricity generated from new utility scale renewables continues to be higher than the pre-COVID-19 level and is expected to remain so in 2024. But prices of fossil fuels have also risen. Following the Russian invasion of Ukraine, coal prices remain well above the average price during 2017-2021. Natural gas price has been volatile and is also projected to be higher than the 2017-2021 average until the end of 2026. This can make some technologies — such as industrial heat pumps and industrial thermal batteries — increasingly cost-competitive when provided the right kind of policy support (for example, financial incentives through existing decarbonization programs).

Data Challenges

Centralized and comprehensive data on the electrification of industry and the changes needed in policy and investment to accelerate its scale up are limited. That is partly because the electrification of industry is reliant on emerging technologies, and partly because insufficient data is being collected and publicly published in a comprehensive manner. Some of the data shown throughout the electrification of industry shift is based on manual aggregation across many sources and only represents what information is publicly available, so may not be fully representative of everything that is happening on the ground.

Photo credits

Photo by Nuala

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