Heavy Industry Puts Decarbonization on Back Burner

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With sky-high prices for gas and electricity threatening the very existence of Europe's energy-intensive industries, some of them have been forced to put emissions-reduction efforts on the back burner for the time being.

"German industry is fighting for survival," Graham Weale, professor of economics and politics at the Ruhr University Bochum told the Energy Intelligence Forum in London.

Speaking on a panel about industrial sectors which face the greatest challenges to rein in their carbon emissions, Weale said "industry has hardly any bandwidth to tackle decarbonization" given its struggles with today's high energy prices.

A recent survey by the German Industry Association BDI found that roughly one in 10 medium-sized businesses in the country has pared back production or stopped it completely because of high gas prices.

The government has recently allocated €200 billion ($195 billion) to help businesses and consumers cope with their energy bills.

Occo Roelofsen, CEO of Dutch firm Power2X, said that in sectors that are difficult to electrify — such as cement, steel, glass, chemicals and fertilizers — "you need to use a whole toolkit of measures to reduce industrial carbon dioxide emissions."

But efforts have been falling far short of what is required, Roelofsen said, noting that less than 100 megawatts of electrolyzers for green hydrogen production were installed last year, which he dismissed as "tiny."

While many big green hydrogen projects have been announced in Europe, very few have taken or are close to taking a final investment decision, he added.

This does not augur well for the EU's target of producing 10 million tons of green hydrogen a year by 2030 as well as importing a further 10 million tons to help European industry decarbonize and shift away from fossil fuels.

The bloc is also spending billions of euros in subsidies to promote promising hydrogen technologies and value chains.

The toolbox for decarbonizing hard-to-abate industries also includes carbon capture utilization and storage (CCUS), blue hydrogen, biomass, direct electrification and direct air capture (DAC).

But while there are many technologies available, demand from Europe's industrial base remains modest so far.

Carbon Clean CEO Aniruddha Sharma said the key areas of potential demand for abatement of industrial emissions are fertilizers, steel and oil refining.

In the refining sector, many companies are producing and using their own low-carbon hydrogen to reduce their use of fossil fuels and the resulting CO2 emissions.

Low-Carbon Policy, ENERGY INTELLIGENCE FORUM 2022, Policy and Regulation, CO2 Emissions, Macroeconomics
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