Viewpoint: Electrification Should be the First Choice to Power Industry

While many industries have hidden behind the “hard to abate” label, advances mean deep emissions cuts are possible across most sectors. Green Alliance’s Liam Hardy says the key now is to ensure industrial electrification gets a fair hearing

THE OBVIOUS ways to cut carbon are to make and consume less and then produce things more efficiently. But that doesn’t solve the problem entirely or help UK companies weather today’s high energy costs.

There are three broad technological ways to cut industrial emissions: carbon capture and storage (CCS) or swapping out fossil fuels with either hydrogen or clean electricity. The fourth option is to replace fossil fuels with biomass (organic matter like trees and energy crops) but, with limited supplies and the risk of doing wider environmental damage through expansion, biomass can only play a minor role.

Electrification is being ignored

So far, electrification has been mostly ignored. Successive governments have committed to spend over £20bn (US$27bn) on carbon capture and clean hydrogen. While hundreds of civil servants have developed complex subsidy schemes to support these technologies in select industrial clusters, a small, under-resourced team is still struggling to create a level playing field for industrial electrification. The latest advice from the Climate Change Committee shows how much has changed in five years. In 2020 their models projected¹ that emissions savings from hydrogen, carbon capture and electrification would be fairly evenly split. Now, they acknowledge that electric technologies should play the dominant role.²

But why is electrification the Cinderella option when it beats hydrogen and carbon capture in so many ways? In our recent report,³ Green Alliance identified eight advantages. To me, three stand out.

First, electric technologies, especially heat pumps, will be the cheapest way to cut emissions. Carbon capture and clean hydrogen are going to be more expensive than fossil-fuelled operations for decades to come, if not forever. Although UK electricity prices are high, that’s mostly because we rely on gas to set the price. As renewables take over, prices should fall and crucially, stabilise.

Second, electrified processes result in the lowest emissions. In contrast, carbon capture projects – and hydrogen made from fossil gas with carbon capture – are undermined by incomplete capture rates and upstream methane emissions. Hydrogen itself is an indirect greenhouse gas 12 times more potent than CO2 and, as a tiny molecule, it is prone to leaks.

Third, electrification isn’t confined to CCS clusters or hydrogen networks, it can be rolled out anywhere. Sites away from industrial clusters are responsible for around half of industrial emissions.

Barrier can be overcome

None of the barriers to industrial electrification in the UK are insurmountable. A big one though is political, with the rise of populist politics. “Simple” answers, like nationalising industries or ditching net zero, won’t help the people and communities let down by decades of failed or non-existent industrial strategy. What’s needed are robust plans to save and grow good, stable jobs in our industrial heartlands.

Beyond politics, there are four main blockers:

COSTS
It is no wonder progress has been slow, with UK industries paying some of the highest prices for electricity in the world, and around four times higher than the equivalent for gas. Businesses tell me this is the biggest barrier – and will remain so until the government supports electricity costs as it does for hydrogen and carbon capture.

GRIDS
The other challenge increasingly heard from industrial operators, and other sectors, is the queue for grid upgrades. Although many industrial sites are in areas with spare grid capacity, many need new connections or enhancements. Network operators, the government, regulators and companies can do a lot to speed these up.⁴ Ongoing queue system reforms should hopefully help.

MOMENTUM
Having used fossil fuels for centuries, there is a lot of inertia across UK industry. Nobody wants to be the first or second business to take up a new electric technology. Everyone wants to see how it pans out for others. We need to hear more success stories like the installation of heat pumps at the Glentauchers distillery in Scotland, and the pilots of electric steam crackers in Germany⁵ and the Netherlands.⁶

INNOVATION
Although many electric technologies, like ovens, boilers and furnaces, are well established, there’s still plenty of scope for innovation. Electric steam crackers are still at the demonstration stage, and the quest for better heat pump refrigerants goes on.

What the government can do

First and foremost, electricity costs must be cut to allow electric technologies to compete with fossil fuels. This would level the playing field with hydrogen and carbon capture, giving businesses the best choice for their operations. The good news is that the UK government has just announced, in their Industrial Strategy paper, that they will expand and deepen the savings available through the British Industry Supercharger scheme, and will remove some policy levies from industrial electricity bills from 2027. This is a good start, but can’t come soon enough, and further efforts to bring down wholesale electricity costs for industry are absolutely crucial.

The government will also look at encouraging the use of power purchase agreements (PPAs) with clean electricity generators. We've argued that government underwriting of PPAs would be an easy and effective way to boost their uptake.

Businesses also need upfront investment in new assets. The former Industrial Energy Transformation Fund was sporadic and unpredictable but was a great way to leverage industry investment. A new, long-term fund, supplying grants and low interest loans, could unlock global investment geared towards cutting carbon.

Alongside a fund, I’d argue that support and advice is critical. Many smaller businesses find it hard to navigate complex subsidy schemes and competitive grant pots, and more still struggle to work through jargon-filled conversations about electricity network capacity. Network operators should be part of that support.

To protect UK industries against dirtier imports, the proposed Carbon Border Adjustment Mechanism⁸ needs to be implemented as quickly as possible and should be expanded to cover more products. Complexity of supply chains makes this difficult, but not impossible.

What industry can do

I hope we’ll see more success stories, with food and drinks manufacturers, paper mills, glass makers and chemical plants going electric. Businesses also need to recognise that every place and grid connection is unique, so they shouldn’t be put off by scare stories of decade-long wait times elsewhere.

The industrial revolution of the 21st century will be powered by clean electricity. For the UK to make the most of it, we’re going to need engineers to install and maintain thousands of electric heat pumps, boilers, furnaces and crackers. That means huge change for the hundreds of thousands of people already working in British industries. To make that change smooth and fair there need to be more opportunities to train in green skills via funded apprenticeships alongside greater industry investment. I’d also like to see greater representation of workers on company and transition boards.

As other countries like Sweden and Germany have shown,⁹ this transition holds enormous potential for people and communities at the heart of historic industries. A thriving green industrial economy, finally free of expensive fossil fuels and powered by homegrown renewable electricity, is the logical way forward.

References

1. CCC: The Sixth Carbon Budget: https://bit.ly/ccc-sixth-carbon-budget
2. CCC: The Seventh Carbon Budget: https://bit.ly/ccc-seventh-carbon-budget
3. Green Alliance: Plugging into industrial electrification: https://bit.ly/plugging-into-industrial-electrification
4. Green Alliance: The strong case for a new approach to grid connection for transport and industry: https://bit.ly/green-alliance-new-approach
5. TCE: World-first electric steam cracker demo starts operations in push to slash emissions by 90%: https://bit.ly/tce-steam-cracker-demo
6. TCE: Coolbrook successfully cracks naphtha in its electric steam cracking pilot plant: https://bit.ly/tce-coolbrook-naphtha
7. PV Magazine: New refrigerant may improve coefficient of performance of air-source heat pumps by up to 21%: https://bit.ly/pv-new-refrigerant
8. Carbon Border Adjustment Mechanism: https://bit.ly/taxation-eu-cbam
9. Green Alliance: Ensuring fairness in the net zero transition: https://bit.ly/green-alliance-fairness