The Best G-20 Markets for Decarbonizing Industrial Low- to Medium-Temperature Heat

The top G-20 markets for industrials seeking to decarbonize their low-to medium- temperature heat are China, France, Italy, Germany, South Korea and the U.K., according to a new report by BloombergNEF and the World Business Council for Sustainable Development

Read the full report here

The transition to low-carbon energy is already well underway within the electricity sector, yet one key aspect of the transition remains overlooked. There has been little-to-no progress made to decarbonize industrial heat – an essential part of industrial processes. For example, it is the energy input that triggers the chemical reactions to make medicine and household cleaning products. It is needed to transform metal ore into steel and, ultimately, consumer goods like cars. It is used to pasteurize milk, brew beer and dry paper.

Industrial heat use accounted for a third of global final energy demand in 2018, producing carbon dioxide emissions roughly equal in size to the total emissions from transport. Coal, oil, and natural gas have dominated the fuel supply for heating to date.

Sourcing low-carbon heat is the next big hurdle for industrial end-users looking to meet their climate targets. This challenge might seem daunting, but it is not insurmountable for corporations. Renewable heat solutions exist and are commercially available to be deployed today in many markets, particularly for low-to medium-temperature heat (defined as heat up to 400 degrees Celsius). Electrification using industrial-scale heat pumps and electric boilers is anticipated to be the front-runner, but bioenergy, geothermal and solar thermal will all play a crucial role too.

The challenge for renewable heat is largely economic: generating industrial heat with fossil fuels is cost competitive in most markets, while many renewable options have high upfront capital costs. Additionally, there is no single answer that can be rolled out across global portfolios. Identifying the most competitive options requires detailed analysis.

BloombergNEF and the World Business Council for Sustainable Development (WBCSD) collaborated to develop Hot Spots for Renewable Heat: Decarbonizing Low- to Medium-Temperature Industrial Heat across the G-20. It is a guide for industrials outlining which G-20 member countries are likely to offer the best conditions for decarbonizing light industry.

China, France, Germany, Italy, South Korea and the U.K. lead the way. These markets offered the best market conditions, policies, resource availability to support decarbonization. This is promising, as the top performing markets represent almost half of low- to medium-temperature heat use today, driven primarily by China.

Unfortunately, the U.S. and India, which represent the second- and third-largest portion of demand for low- to medium-temperature heat respectively, were deemed less favorable markets for decarbonization. This was driven by both markets having limited-to-no national-scale policy. Meanwhile, decarbonizing heat in countries such as Russia, Saudi Arabia and South Africa prove particularly challenging.

Countries recognized as most favorable for decarbonization were deemed to have favorable economics, such as relatively high fossil fuel prices and a low power-to-gas ratio, suggesting that projects could be realized. They also had more mature markets for renewable heat solutions, indicating a ready presence of sophisticated installers and solutions providers.

Governments seeking to achieve net-zero targets, as well as attract and retain leading industrials, must focus on setting supportive policies. Putting a price on emitting carbon has been a popular avenue for many countries, although the price and allocation of free allowances has dampened the potential impact.

To effectively decarbonize heat, it will be critical to improve carbon markets and implement other policies such as upfront cost subsidies and renewable heat targets. Any progress made by G-20 countries will mark a huge step toward achieving climate goals and should be top of mind as we approach COP 26 in November.

The complete report is available for download via the following link.

Hot Spots for Renewable Heat: Decarbonizing Low- to Medium-Temperature Industrial Heat across the G-20


The World Business Council on Sustainable Development (WBCSD) is a global, CEO-led organization of over 200 leading businesses working together to accelerate the transition to a sustainable world. Our member companies come from all business sectors and all major economies, representing a combined revenue of more than $8.5 trillion and 19 million employees. Together, we are the leading voice of business for sustainability: united by our vision of a world where more than 9 billion people are all living well, within planetary boundaries, by 2050.

Our Climate & Energy program is designed to advance ambitious climate strategies and leverage the collective power of our members to accelerate climate recovery.  We work to support and accelerate our members’ plans to reduce and remove Greenhouse Gases (GHGs) and to develop resilient business models that can adapt to and maximize the opportunities from the low-carbon transition. We work across sectors and value chains, to integrate ambitious climate strategies, advance taxonomy and disclosure standards, advocate for policy intervention, and develop innovative solutions. 

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