© Fraunhofer
PATHWAYS TO DEEP DECARBONISATION OF THE GERMAN INDUSTRY SECTOR UNTIL 2045
W I F O R e s e a r c h S e m i n a r ( O n l i n e ) , 8t h S e p t e m b e r 2 0 2 1
D r . A n d r e a H e r b s t , F r a u n h o f e r I n s t i t u t e f o r S y s t e m s a n d I n n o v a t i o n r e s e a r c h I S I
0 100 200 300 400 500 600 700 800 900 1000
2018 2030 2045 2018 2030 2045 2018 2030 2045 2018 2030 2045
8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF
Energy demand in TWh
Naphtha Other fossil Waste non- RESCoal
Fuel oil Natural gas Solar energy Other RES Ambient HeatDistrict Heat
Biomass Syn.
methane Hydrogen Electricity 2018
190 Mt + 57 Mt Feedstock Chemicals
T h e F r a u n h o f e r - G e s e l l s c h a f t a t a G l a n c e
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e volume
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ct Research
€2.4 billion Major infrastructure capital expenditure and defense research
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Ariadne analyses how policy measures work in a joint learning process between science and society - from individual sectors to the big picture
https://ariadneprojekt.de/
P r o j e c t C o n t e x t - C o p e r n i c u s P r o j e c t A R I A D N E 2 0 2 0 - 2 0 2 3
www.kopernikus-projekte.de
www.kopernikus-projekte.de/projekte/ariadne | 3
Policy Unit System- analysis
Gover-
nance Instru-
ments
Energy transition strategies and their systemic effects and
sectoral interactions
Policy instruments to achieve the goals in an efficient and
socially balanced way Governance and institutions
for an effective policy process Joint learning process of science, politics, business and
society via participation formats
Ariadne analyses how policy measures work in a joint learning process between science and society - from individual sectors to the big picture
P r o j e c t C o n t e x t - C o p e r n i c u s P r o j e c t A R I A D N E 2 0 2 0 - 2 0 2 3
Policy Unit System- analysis
Gover-
nance Instru-
ments
Energy trans ition s trategies and their s y s tem ic effects
and s ectoral interactions
Policy instruments to achieve the goals in an efficient and
socially balanced way Governance and institutions
for an effective policy process Joint learning process of science, politics, business and
society via participation formats
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OUTLINE
Introduction
Methodology
Pathways
Results
Policy implications
Summary
T h e i n d u s t r i a l s e c t o r i s r e s p o n s i b l e f o r a b o u t 2 3 % o f G H G e m i s s i o n s i n G e r m a n y
› About 70 % of industrial energy demand is generated by companies in energy-
intensive industries
(e.g. iron & steel, cement, basic chemicals)
› To achieve long-term GHG neutrality, industrial emissions must also trend towards zero in the long term
› Interim target for the industrial sector 2030:
118 Mt = 57% emission reduction by 2030 compared to 1990
› Unclear which technology path industry Engineering Glas and ceramics Ferrous metal processing Vehicle construction Non-ferrous metals Non-metallic mineral processing Pulp and paper Food, drink, tobacco Iron and steel Chemicals
Gases
Coal
Mineral oils
Other
Electricity
District Heat RES
Industrial final energy consumption by economic sector
© Fraunhofer
* Excluding refineries; Source: Fraunhofer ISI
T h e t r a n s f o r m a t i o n o f t h e i n d u s t r i a l s e c t o r s t i l l f a c e s v e r y m a j o r c h a l l e n g e s
› Many options such as energy efficiency, biomass, electrification, green hydrogen, power to gas (PtG), circular economy, material efficiency, process change and CCU/S are on the table
› Tension field:
› Individual contributions are hotly debated
› CO2-neutral processes differ in maturity and distance to market
› Transformation cannot succeed without an appropriate political framework
› Preservation of international competitiveness of industry
› Availability of resources & infrastructure
Direct industrial emissions by end-use category and sector*
2018 190 Mt
+ 57 Mt Feedstock Chemicals
Coke technically required in blast furnace
Strong reliance on natural gas
(also as feedstock) Strong
reliance on natural gas, mostly high temperature
High temperature
limits use of renewables
Process emissions chemically linked to production
OUTLINE
Introduction
Methodology
Pathways
Results
Policy implications
Summary
© Fraunhofer
G a i n i n g k n o w l e d g e t h r o u g h c o m p a r i s o n i n s t e a d o f a s i n g l e
" l e a d s c e n a r i o ”
Central questions
› How could different (technology) pathways to a near- climate neutral industry by 2045 look like?
› What role does the use of electricity and hydrogen play in the different scenarios?
Approach
› Comparison of the decarbonisation of the energy system through
› a balanced technology approach (scenario 8Gt_Bal)
› very high use of electricity (scenario 8Gt_Elec)
› very high use of hydrogen (scenario 8Gt_H2)
› very high use of synthetic hydrocarbons (8Gt_SynF)
› Modelling of the transformation pathways until 2045 with a detailed bottom-up model
Bottom-up modelling
B o t t o m - u p s i m u l a t i o n m o d e l F O R E C A S T
› Bottom-up simulation
› High technology resolution
› All important abatement levers
› Complete energy and GHG balance
https://www.forecast-model.eu
© Fraunhofer
OUTLINE
Introduction
Methodology
Pathways
Results
Policy implications
Summary
T h e s c e n a r i o s s h o w a l t e r n a t i v e p a t h s t o a l m o s t C O 2 - n e u t r a l i n d u s t r i a l p r o d u c t i o n b y 2 0 4 5
8Gt_Bal
• No clear technology focus
8Gt_Elec
• Direct electric solutions preferred
• Hydrogen as feedstock
8Gt_H2
• Hydrogen widely available
• Use preferred in terms of energy and feedstock
8Gt_S y nF
• Synthetic methane widely available
• Preferred for energy and feedstock
All GHG-neutral S cenarios
• GHG reduction in the industrial sector >95%.
• Economic development (+1% p.a.)
• Ambitious energy and material efficiency + high shares of secondary production
• Avoid use of biomass in focus scenarios
• Avoid CCS
© Fraunhofer
T h e s c e n a r i o s s h o w a l t e r n a t i v e p a t h s t o a l m o s t C O 2 - n e u t r a l i n d u s t r i a l p r o d u c t i o n b y 2 0 4 5
8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_S y nF
CCS Steel, Chemicals,
Cement and lime no CCS for cement
CCU Cement and lime Cement and lime as CO2-source no
Proces s s w itch to low -carbon prim ary proces s es
Steel H2-DRI PtG-DRI
Cement Low carbon cement +
waste, clinker factor
Electric clinker and lime kilns
Low carbon cement + H2-bburner
Low carbon cement + Gas
Chemicals MtO, H2 methanol, H2 elektrolysis ammonia MtO + PtG methanol,
H2 elektrolysis ammonia
Glass H2 Glass melting Electric melter H2 Glass melting Glass melting
(status-quo)
Fuel s w itch
Industrial furnaces H2, Electricity, Waste Electricity dominant H2-burner furnacces and
steam Gas dominant
Steam and hot
water Mix Electricity dominant H2-burner furnacces and
steam Gas dominant
T e c h n o l o g y o v e r v i e w : H 2 a n d e l e c t r i c i t y
S ubs ektor Prozes s/ Produkt Konv entionelle Technologie H2-Alternativ e TRL Elektris che Alternativ e TRL Rohs toffliche Verw endung
Grunds toff- chem ie
Ammoniak Dampfreformierung Synthesegasbereitstellung aus H2 8-9 -
Methanol Dampfreformierung Synthesegasbereitstellung aus H2
und CO2 8-9 -
Olefine (HVC) Steam Cracker Methanol-to Olefins 8-9 Elektr. Cracker 5-6
Raffinerien Rohölverarbeitung Dampfreformierung H2 aus Elektrolyse 8-9 -
Bereits tellung v on Prozes s wärme
Metalle
Rohstahl Hochofen Eisenerz-Direktreduktion
(H2-DRI) 5-7 Elektrolyse 4
Nicht-Eisen Metalle
Erdgas-befeuerter Ofen (Teilweise bereits elektrische
Öfen)
H2-befeuerter Ofen 4-5 Elektr. Ofen 5-7
Gießerei Walzen / Weiterverarbeitung
Glas
Behälterglas Erdgas-befeuerte
Glasschmelzwanne H2-befeuerte Glasschmelzwanne 4-5 Elektr. Glasschmelzwanne 6-8 Flachglas
Zement
© Fraunhofer
OUTLINE
Introduction
Methodology
Pathways
Results
Policy implications
Summary
I n a l l s c e n a r i o s , h i g h a m o u n t s o f C O 2 - n e u t r a l s e c o n d a r y e n e r g y s o u r c e s a r e u s e d
200 300 400 500 600 700 800 900 1000
Energy demand in TWh
Naphtha Other fossil Waste non- RES
Coal Fuel oil Natural gas Solar energy Other RES Ambient Heat
District Heat Biomass
› Decrease in energy consumption in all scenarios ~ 20%, through
› Energy efficiency
› Material efficiency and circular economy
› More efficient new processes
› System boundary effect: H2 production now outside the industrial sector
› 2045:
› No fossil fuels used
› Very distinct technology pathways:
Energy demand incl. feedstocks
© Fraunhofer
R o b u s t h y d r o g e n d e m a n d e s p e c i a l l y i n t h e s t e e l a n d c h e m i c a l i n d u s t r y
› Hydrogen demand for steel and chemicals (ammonia, methanol/olefins): ~170 TWh in 2045
› This demand is distributed among few industrial locations ( about 20 sites)
› 8Gt_H2 Scenario:
› Large-scale use of hydrogen for process heat generation in all industries + 169 TWh = 342 TWh in 2045
› Additional demand is distributed over a high number of locations and requires a large- scale expansion of the distribution grids
0 50 100 150 200 250 300 350 400
2018 2030 2045 2018 2030 2045 2018 2030 2045 2018 2030 2045
8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF
Hydrogen demand in TWh
H2-steam generation H2-furnaces Feedstock
Hydrogen demand by end-use
C o n v e n t i o n a l e l e c t r i c i t y c o n s u m e r s d e c l i n e s l i g h t l y d u e t o e f f i c i e n c y g a i n s i n a l l s c e n a r i o s
› Conventional electricity consumers:
process cooling, space cooling, electric motor systems, others
› 8Gt_Elec Scenario:
› Electrification of steam generation and industrial furnaces drives electricity demand –> +215 TWh in 2045
› 8Gt_H2 & 8Gt_SynF:
› Efficiency gains and electrification roughly balance each other out
50 100 150 200 250 300 350 400 450
Electricity demand in TWh
CCS
PtH - furnaces
PtH - Steam generation
PtH - Space heating
Other applications
Electric motor system + Lighting Space cooling
Electricity demand by end-use
© Fraunhofer
E l e c t r i c i t y e q u i v a l e n t s f o r H 2 a n d P t G g e n e r a t i o n c h a n g e t h e p i c t u r e c o m p l e t e l y
- 100 200 300 400 500 600 700 800 900 1,000
2018 2030 2045 2018 2030 2045 2018 2030 2045 2018 2030 2045
8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF
TWh Electricity-equivalent
Electricity- equivalent PtG Electricitry- equivalent H2 CCS
Steam and hot water
Industrial furnaces Space heating
Other
Space cooling
Motor systems
& Lighting Process cooling
Electricity demand by application incl. H2 and PtG
› Hydrogen and PtG are produced in a CO2-neutral way via electrolysis
› Very high electricity demand
› Today 200 TWh
› 600 to 950 TWh until 2045
› Outside the system boundary used by the industrial sector
› Provision of CO2-neutral secondary energy sources of central importance
› Significant quantities already required by 2030
› Bi-valent demands as a starting point?
N e a r G H G - n e u t r a l i t y i n 2 0 4 5 i s a c h i e v e d i n a l l s c e n a r i o s
1990 2018 2020 2030 2040 2045
Sector target old 140
Sector target new 118
8Gt_Bal 278 190 178 117 32 9
0 50 100 150 200 250 300
GHG-emissions in Mt CO2-eq. -97%-58-60% -51%
› 2030:
› Achieved reduction -51 to 60%
› The new sector target (-57%) for industry is overachieved in 3 of 4 scenarios
› Slower decline in SynFuel Scenario due to blending of PtG in gas grid
› 2045:
› Achieved reduction -96 to 97%
› Almost no more fossil GHG emissions
› Only a few Mt of process emissions
© Fraunhofer
T h e t i m e h o r i z o n u n t i l 2 0 3 0 i s c r u c i a l t o a c h i e v e c l i m a t e n e u t r a l i t y b y 2 0 4 5
› Highest reduction of >30 Mt CO2-eq.
is due to fuel switching
› Conversion to electricity, hydrogen and gas for process heat generation
› Material and energy efficiency contribute about 20 Mt CO2-eq.
› Additionally offsetting the emission- increasing impulses of economic growth
› Gross reduction of this field of action would be even higher
› New processes and CCU/S with about 15 Mt CO2-eq. reduction make a
significant contribution
Contribution of individual abatement options to emission reductions by 2030 compared to 2018 in the scenario 8Gt_Bal
C e n t r a l b a s i s o f t h e t r a n s f o r m a t i o n s c e n a r i o s i s t h e c o n v e r s i o n o f i n d i v i d u a l p r o d u c t i o n p r o c e s s e s i n t h e b a s i c m a t e r i a l s i n d u s t r y . . .
› ... to technologies that allow (almost) CO2-neutral operation (e.g. crude steel, cement clinker, olefins, ammonia and methanol)
› Assumption: First plants will come into operation from 2025 onward and take significant market share by 2030 (e.g. H2-DRI 5 Mt in 2030, ~20% of primary production)
› This conversion is associated with investments: In many areas, new plants or extensive modernisation of the existing stock are necessary
› The age structure of the stock accommodates this -> 20 to 50% of relevant plants will reach the end of their calculated lifetime
› BUT there is a risk of re-investment in fossil plants: windows of opportunity arising from the existing modernisation cycles should be used for the conversion to CO2-neutral production
› In most cases, conversion also involves switching to expensive CO2-neutral secondary energy sources
© Fraunhofer
C O 2 - n e u t r a l p r o c e s s h e a t s u p p l y i s a k e y s t r a t e g y f o r d e c a r b o n i s i n g i n d u s t r y
› ~470 TWh final energy demand for process heat in 2018 - mostly natural gas and coal
› Possible reduction of 30 Mt CO2-eq. until 2030
› Steam and hot water:
›High-temperature heat pumps, biomass, electric boilers and hydrogen
›Economic viability depends on the price difference between energy sources
›Investments only account for a small share of the total costs
›Multivalent steam generation central for
starting the transformation of the plant stock
0 50 100 150 200 250 300
All 8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF 8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF All 8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF 8Gt_Bal 8Gt_Elec 8Gt_H2 8Gt_SynF
2018 2030 2045 2018 2030 2045
Steam and hot water Furnaces
TWh Final energy
Coal Fuel oil Natural gas Other fossil
Waste non-RES Electricity Hydrogen Biomass
Other RES Ambient Heat District Heat Syn. Methane
Final energy steam & furnaces
E n e r g y a n d m a t e r i a l e f f i c i e n c y a s t h e b a c k b o n e o f C O 2 - n e u t r a l i n d u s t r i a l p r o d u c t i o n
› An ambitious increase in energy and material efficiency in all applications and sectors is a prerequisite for CO2-neutral industrial production in the scenarios examined
› Reduces the final energy demand
› Lowers the costs for the expansion of renewable energies and grid expansion
› and the import of secondary energy sources
› 8Gt_Bal scenario:
› Final energy demand (excluding feedstock) decreases from 730 TWh (2018) to 637 TWh (2030)
› Final energy intensity in relation to gross value added falls from 1.37 kWh/euro in 2018 to 1.07 in 2030 (average annual efficiency progress of about 2%)
› E.g. secondary route from recycled steel scrap in crude steel production increases from 30% (2018, 13 Mt) to 39%
(2030, 16 Mt)
› Prerequisite: Effective instruments to increase EE
© Fraunhofer
C O 2 c a p t u r e , u s e a n d s t o r a g e o f p r o c e s s - r e l a t e d e m i s s i o n s
About one third of the GHG emissions of the industrial sector are process-related which stem from chemical reactions within the production process
Cement and lime production:
› Process emissions cannot be avoided with conventional measures (responsible for 2/3 of emissions)
› Increasing the use of additives or low-CO2 binders is not sufficient
› CO2 capture and use or storage (CCU/S) is necessary in all scenarios
› By 2030, 30% of the production volume of these two products in the scenarios is equipped with CCU/S:
› avoiding 6 Mt of the remaining CO2 emissions Prerequisites:
› Implementation of appropriate legal framework conditions
› Development of infrastructure for the transport of production plants to storage sites and demanders in the chemical industry
› Socio-political consensus that CO2 capture and use/storage of process-related emissions is necessary
OUTLINE
Introduction
Methodology
Pathways
Results
Policy implications
Summary
© Fraunhofer
I n d u s t r y i s n o t o n t h e p a t h t o w a r d s G H G n e u t r a l i t y w i t h e x i s t i n g i n s t r u m e n t s
› All types of instruments are available and all important abatement levers are basically addressed*
› Nevertheless the 2030 target will be missed by ~30 Mt CO2-eq.
› CO2 price increase is not enough to make
CO2-neutral secondary energy sources competitive
› Large residual process emissions (e.g. cement)
› Hardly any additional progress in circular economy:
instruments are not geared towards decarbonisation
› No efficient use of materials in consumption sectors:
no CO2 steering effect
› Still high uncertainty for investors
60 54 49 45
32 27 22 15
4 3
4 3
42 36
35 32
3
3 2
1 25
20 18
15 24
20 18
15 279
0 50 100 150 200 250 300
1990 2018 2020 2030 2040
THG-Emissionen in Mt CO2-Äq.
Kohle Heizöl Erdgas
Abfall fossil Andere fossil Differenz energiebedingt
Total Sektorziel 2030
-42% -55%
163
-47%
149 -32%
190
128
*status August 2020
S i x e l e m e n t s o f a p o t e n t i a l i n s t r u m e n t m i x i n p a r t i c u l a r a r e w o r t h m e n t i o n i n g h e r e :
Carbon Contracts for Difference
• Closing the profitability gap
• Support market introduction of CO2-neutral processes
• Long-term phasing out
• Accompanying:
expansion of existing R&I promotion;
guarantees, sureties, green bond
Green Lead Markets
• Accelerate market
introduction &
upscaling
• e.g. quotas, product
labelling, public procurement
EU-ETS Minimum Price Path
• Providing long- term clarity and certainty for investors
• Increase the incentive effect of emissions trading
Infrastructure development
• High
uncertainty concerning (local)
availability &
costs/prices of CO2-neutral energy sources
• Hydrogen Backbone Grid
• CO2-Transport Grid
• Clear milestones provide
planning security
Policies targting CE & MatEff
• Strong CO2 price can provide incentives
• CO2 price will not be sufficient on its own
• Markets for recycled products
• Uniform product
standards (EU &
national level)
CBAM & global climate regime
•Border
tax/notional ETS
•Consumption or climate levy
•Needs
accompanying instruments
© Fraunhofer
OUTLINE
Introduction
Methodology
Pathways
Results
Policy implications
Summary
S u m m a r y
› The scenarios show alternative paths to almost CO2-neutral industrial production by 2045. They involve ambitious changes to the entire industrial production system and assume a profound transformation in many sectors and value chains
› In all scenarios, in addition to improvements in material and energy efficiency, high quantities of CO2-neutral secondary energy sources are used
› Time horizon until 2030 is crucial - Until then, it must be possible to scale up CO2-neutral processes from pilot and demonstration scale to industrial level and make them economically viable.
› High investments in new plants are necessary and solutions for the provision of CO2-neutral hydrogen and electricity must be implemented.
› Accordingly, the regulatory framework must offer a clear perspective for CO2-neutral production. This particularly concerns the availability and role of CO2-neutral hydrogen, gas and electricity.
› Targeted subsidies for operating and investment costs are necessary as long as the CO2 price alone does not enable
© Fraunhofer
Thank you for your attention
Dr. Andrea Herbst
Competence Center Energy Technology and Energy Systems Fraunhofer Institute for Systems and Innovation Research ISI Breslauer Straße 48 | 76139 Karlsruhe | Germany
Phone +49 721 6809-439 | Fax +49 721 6809-439 mailto: [email protected]
https://www.isi.fraunhofer.de/de/themen/wasserstoff.html http://www.forecast-model.eu
http://www.isi.fraunhofer.de
Contributions from: Dr. Tobias Fleiter, Dr. Matthias Rehfeldt, Marius Neuwirth
Full Report to be publis hed in October 2021
https://ariadneprojekt.de/publikationen/