Decarbonizing Industrial Heat a Key to Climate Fight: Q&A

By Iain Wilson, BloombergNEF. This article first appeared on the Bloomberg Terminal.

Industrial heat, or the thermal energy used in manufacturing processes, is largely unseen, even though it is a big producer of greenhouse gas emissions. Governments around the world can play a critical role in decarbonizing industrial heat by using their procurement policies effectively, according to one energy expert.

“If governments imposed standards and say they’re only going to buy iron and steel or cement, for example, that met certain sustainability standards, then that could drive a lot of change in the marketplace, enough to promote low-carbon innovation,” said David Sandalow, inaugural fellow at the center on global energy policy at Columbia University and co-director of the energy and environment concentration at the school of international and public affairs.

Along with his role at Columbia, Sandalow is also a member of the Innovation for Cool Earth Forum (ICEF) steering committee and chair of ICEF’s Innovation Roadmap Project. ICEF recently took on the issue of decarbonizing industrial heat as part of its clean energy innovation roadmap.

According to BloombergNEF, industrial heat now accounts for 25% of global final energy demand. Global industrial heat demand has risen 50% since 2000, reaching 28,000 terawatt-hours in 2016. At the moment, coal is a major fuel source in the iron and steel, cement and chemicals sectors, which account for the largest share of industrial heat demand.

“The transport sector and the power sector get much more attention than heat for industry but this problem of how you decarbonize the production of heat for industry is hugely important for solving the climate crisis,” Sandalow said.

Sandalow was interviewed at BNEF’s Shanghai summit in December. An edited transcript of the interview follows:

Q: What is ICEF?

A: ICEF is a meeting held every October in Tokyo. Its sixth annual meeting was held this October and it was convened originally by Prime Minister Abe. The goal is to help solve the climate crisis by promoting clean energy innovation. We convene leaders from around the world to come for two days and talk about the most pressing issues related to clean energy innovation and climate change. There’s also a number of processes that go throughout the year. We chose 10 of the leading innovations from companies that submit their ideas for promoting clean energy. There’s also a deep dive on one specific topic which we call the innovation roadmap.

Q: To what end? What are the goals of ICEF?

A: The purpose is to help solve the climate crisis and to promote clean energy innovation and to do it by bringing some of the best minds together to talk about the topic and to work at it every year.

Q: Going back to the innovation roadmap, can you speak about that and your involvement in it?

A: It’s been my privilege to chair this innovation roadmap that ICEF convenes every year for the past five years. We’ve now done half a dozen clean energy innovation roadmaps. We’ve done them on topics such as carbon capture and utilization, looking at how you take carbon dioxide and convert it into useful products. Last year we did one on direct air capture of carbon dioxide. A very important topic – how do you pull carbon dioxide out of the atmosphere to reduce the concentration.

This year we did a roadmap on decarbonizing industrial heat. This is a very important topic that very few people are focused on or are aware of the importance of. Ten percent of global carbon dioxide emissions come from producing heat for industry. We’re talking about iron and steel, chemicals, the cement industry principally. That 10% of global carbon dioxide emissions is more than the emissions from cars and planes combined. The transport sector and the power sector get much more attention than heat for industry but this problem of how you decarbonize the production of heat for industry is hugely important for solving the climate crisis.

Q: If it’s such a big issue, why is there not more awareness?

A: I think it’s because it just doesn’t touch our lives on a daily basis directly. Almost everybody on the planet gets into a vehicle of some kind every day. We get in cars, a lot of us fly. There’s been a lot of dialogue about solar panels and renewable power. All of that’s very very important for addressing the climate crisis but we just don’t go into factories where steel is produced on a regular basis so it doesn’t touch us as directly. The products those factories make touch our lives directly but we just don’t experience it.

Q: So what is ICEF’s methodology when tackling something like this?

A: We pull together top experts every year and do documentary research. We hold workshops, we pull together the best minds, and then we produce a report on a pretty fast timeframe to steer work on these topics.

We had a really great team working on the topic of decarbonizing industrial heat and we identified a number of reasons why this is hard. Fossil fuels — coal, oil and gas — are very good at producing heat for industry. They’ve been doing it for more than a century in many cases. They produce high heat, they do it dependably and reliably and on a steady basis. You can turn them on and off easily. Replicating those attributes of fossil fuel-produced heat is difficult.

It can be done and we identified four different technology areas that we think are especially promising. The first is using hydrogen. Hydrogen burns at high temperatures, it can be turned on and off relatively easily. It’s promising but there are two challenges. One of them is that hydrogen isn’t always sustainable depending on the way it’s produced and it can be very expensive. Finding sustainable, low-cost ways of producing hydrogen is a challenge.

The same thing with biomass. That’s a great way to produce high-quality heat. It’s being done in a few places in the world right now for industrial facilities, but doing it in a sustainable way and a low-cost way is challenging.

Electrification is another interesting opportunity. In some industrial sectors you can use electricity for resistive heating but again there are cost challenges. And then we look at carbon capture and storage. Even when you use fossil fuels if you capture the carbon dioxide that’s generated and store it underground, that becomes sustainable from a climate change perspective.

Q: Has there been any industry in particular that has done a good job in decarbonizing?

A: No industry is decarbonizing these processes on a massive scale or even on a smaller scale. There have been some pilot projects and there’s some pilot work under way in steel and cement and in some chemical facilities but it’s all small scale at this point.

Q: How can this be addressed then in a more vigorous way? Is it a question of policy, is it a question of money? You’ve talked about technology. What needs to happen to make this accelerate?

A: It’s money, it’s government policy, it’s awareness. It’s all of those things. We make a number of recommendations in the report. We recommend significantly increased investment in research and development both from the public sector and the private sector. We also recommend a number of specific policy tools. One of them that is particularly promising is procurement. Governments buy a lot of iron and steel. Governments buy a lot of cement. If governments imposed standards and say they’re only going to buy iron and steel or cement, for example, that met certain sustainability standards, then that could drive a lot of change in the marketplace enough to promote low-carbon innovation.

Q: It sounds like an RE100 type of group is needed?

A: Yes, and there are a lot of synergies. The type of work RE100 is doing and this type of approach can go very well together. Renewable energy can be a very important factor in helping to drive sustainable heat for industry.

Q: Beyond the obvious contributing to save the plant, what is in it for an industry like steelmaking?

A: The opportunity to make money and come out well-positioned as these changes are driven through the marketplace in the next couple of decades I think is huge. If we are going to solve the climate crisis, we’re going to need to produce these goods in a low-carbon way. There are going to be more drivers in that direction. Industries that get out ahead on this are going to come out well in the years ahead.

Clients can find more BNEF research on industrial heat here.

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