Industrial processes remain the most difficult decarbonization challenge due to their high energy use, reliance on high-temperature heat, and dependence on carbon serving as the primary building block for a variety of downstream products. Furthermore, alternative technologies to replace incumbent processes are still under development and unlikely to alter the value chain anytime soon. While there are potential technologies to generate carbon-neutral heat, the carbon molecule itself will remain an essential feedstock, but the source may eventually change significantly either through recycling or through alternative sources.
With the industrial sector as the last frontier for global carbon neutrality, the decarbonization of industry is a decades-long initiative. While COVID-19 may have momentarily shifted the political discourse away from climate change, the industrial sector will not escape the looming threat of regulatory constraints with several countries moving forward with carbon neutrality endeavors despite the pandemic. Some are even keen on using the crisis as a once-in-a-lifetime opportunity to kick-start the green transformation of local industries.
In this blog, we take a look back at some of the most important developments that occurred in the Decarbonization of Industry storyline.
- Neste acquired a minority stake in Sunfire and will deploy the high-temperature electrolysis for renewable hydrogen at one of its refineries. This marks Neste’s first foray into electrochemistry and appears to be the company’s attempt to use Sunfire’s technology to decarbonize its oil and gas operators while still retaining use of its existing assets.
- Schlumberger launches new venture for water electrolysis through its New Energy business unit and in partnership with French Alternative Energies and Atomic Energy Commission (CEA) and Vinci Construction. The partnership aims to commercialize a solid oxide water electrolyzer (SOEC) originally developed by CEA.
- EDF, Ørsted, and Thyssenkrupp amongst several others formed a collaboration to deploy a 30 MW electrolyzer at the Heide Refinery in Germany. The project is three times as big as Shell’s 10 MW electrolyzer plans at its Rheinland Refinery is the latest in a growing list of refiners collaborating with electrolyzer developers.
- Air Products, Thyssenkrupp, Haldor Topsoe, and ACWA Power will launch a 4 GW solar & wind project vallued at $5 billion in NEOM, Saudi Arabia. The project will produce 1.2 million ton/year of green ammonia for exports.
- Iberdrola and Fertiberia will launch a 100 MW green ammonia project in Spain. Estimated at $175 million, the 100 MW photovoltaic plant will produce green hydrogen, which Fertiberia will then combine with nitrogen at its existing fertilizer plant to produce low-carbon ammonia.
- The German Federal Ministry of Economy and Energy unveiled Germany’s national hydrogen strategy, calling for 5 GW of new green hydrogen capacity and dedicating $8 billion towards development. A further $2 billion will go towards international and cross-industry collaboration projects.
- The Netherlands announced plans to explore the possibility of creating a local trading platform for hydrogen while will include guarantees on origin and a hydrogen price index. The creation of such a platform is still a long-term endeavor but will provide a key regulatory foundation to boost the development of a hydrogen economy.
- Germany pledges to decarbonize its steel sector by 2050, which it estimates would cost $34 billion. This pledge comes on the heels of the unveiling of its National Hydrogen Strategy and will likely lead to potential supporting mechanism like a minimum quota for low-carbon steel or a “green steel” label.
- Asia’s three largest economies each made carbon neutral pledges in 2020. China announced goals for peak carbon emissions by 2030 and carbon neutrality by 2060, Japan increased its emissions reduction goals from 80% to carbon neutral by 2050, and South Korea made a similar carbon neutral goal by 2050.
- Shell and Dow announced plans to co-develop technology to electrify steam crackers for ethylene production. While the two companies did not disclose any timeline for development and scale-up, it joins the likes of Neste, BASF, SABIC, and Total is developing electric cracking technology in 2020.
- Air Products and Thyssenkrupp partner for global deployment of Thyssenkrupp’s novel zero-gap alkaline water electrolyzer. Zero-gap alkaline electrolysis combines the high efficiencies of proton exchange membrane (PEM) and solid oxide electrolysis while retaining the “low” capital costs of conventional alkaline water electrolyzers.
- LKAB, SSAB, and Vattenfall formed a consortium in 2016 under the name Hybrit for the production of carbon-free steel using direct reduction of iron ore with green hydrogen. The consortium reached a new milestone with the opening of a 10,000 MT per year pilot facility that will demonstrate the production of iron without the use of cokes.
Additionally, the Lux Energy Team curated the following “Analysts’ Choice” for further reading on the Decarbonization of Industry storyline.
- The Cost of Electrifying Chemical Production. Electrolysis technologies provide an opportunity for the chemical sector to decarbonize its supply chain and tap the growing capacity of renewable electricity as an alternative to oil and gas feedstock. In this report, Lux examines the economics of power-to-chemicals and answer a key question – which chemical manufacturing platforms will be electrified by 2050 and what will it take for electricity to end the dominance of oil and gas in the chemical sector?
- The Future Role of Nuclear Energy. Nuclear energy holds vast promise for low-emission power generation, but faces existential challenges from alternative energy sources, decommissioning and safety concerns, and poor project construction outcomes. A new generation of reactor designs promises to solve the industry’s woes and expand nuclear energy’s market beyond simply power production. As electrification grows across transportation and industry in the 2030s and beyond, nuclear may garner revitalized interest and find a new home in directly decarbonizing industry.
- Green Hydrogen. Hydrogen is an important building block for the refining and petrochemicals industry and is gaining increasing importance as an energy carrier. Water electrolysis offers an alternative for producing low- and zero-carbon hydrogen (green hydrogen) and will likely be the foundation of a global hydrogen economy. See Green Hydrogen’s #6 ranking in our annual Top Emerging Technologies to Watch report.
- Haldor Topsøe’s eSMR is a middle-ground solution for fully decarbonized hydrogen production. eSMR is based on the electrification of its natural gas-fired steam methane reformer (SMR), replacing the methane used for heat with electricity. In addition to the reduced CO2 footprint, a key feature of the eSMR is the thin catalyst layer on the wall of the reactor, which improves the heat transfer to the active metal catalyst, resulting in 20% utilization of the active catalyst sites, compared to just 5% in conventional SMR.
- TNO’s EMBER project is a potential solution for low-carbon hydrogen when electrolysis is not an option. The EMBER technology is based on methane pyrolysis. Methane is cracked at temperatures above 1,000 °C in a molten metal reactor to produce hydrogen gas and solid carbon. Hydrogen gas flows through the outlet, while the solid carbon is captured in the molten metal – it is then extracted out of solution via molten salt solution. TNO does not expect a commercial system before 2035, however estimates a hydrogen production cost of approximately $1.30 per kg to $1.50 per kg of hydrogen assuming a solid carbon offtake price of $100 per MT.
This blog is part of the Lux Energy Team's Year in Review series examining the highlights and key developments of the energy industry in 2020. For an overview of the other storylines in Owning the Energy Transition, be sure to subscribe to our energy newsletter.