Electricity is the key to decarbonization.
- We need to increase the role of clean energy in our electricity systems; the tech is proven and cost competitive today.
- We need to electrify as many energy end uses as possible across transportation, buildings, and industry. This enables us to phase out directly burning fossil fuels for energy in those sectors.
In this post, I’ll focus on the latter, describing electrification opportunities in each sector with high-level assumptions on the emissions that may be addressed.
Theoretically, electricity & clean energy could eliminate the vast majority of future carbon emissions.
Making some basic assumptions on the level of electrification in each sector and very simple math, I’ve illustrated a scenario for the US where, using today’s CO2 emissions as the baseline, electricity could address 40% of emissions by 2030 and over 60% by 2050; 80% if adoption is more aggressive*.
What this means:
- Electrification provides the pathway to eliminate most carbon emissions.
- It must happen on a large scale and quickly given our target of net zero emissions by 2050 to limit warming to +1.5°C.
- The analysis suggests there is a huge potential, but we need to be much more aggressive in tech development and commercial adoption to achieve 80% or more electrification.
- Of course, a big assumption outside the scope of this analysis is that the electricity demand will be supplied from clean energy sources - another very heavy lift that will need to happen simultaneously.
This is really hard, but it isn’t impossible. Read on for a discussion on each sector, the specific electrification opportunities, and the potential scope.
*Disclaimer: The analysis in this post is heavily simplified. However, it is intended as a thought exercise to illustrate the scope of electrification and clean energy. The analysis uses simple assumptions and back of the envelope calculations applied to data on specific US CO2 emissions sources, using primarily a ‘what-if’ approach to estimating adoption. The ‘what-if’ adoption levels are guided by qualitative perspective on technology maturity, commercial stage, and difficulty of decarbonizing each specific emission source.
Contents
- Background (3 min. read)
- Overview (3 min. read)
- Transportation (5 min. read)
- Industry (5 min. read)
- Buildings (2 min. read)
- Conclusion (1 min. read)
Background
Electrification and the Broader Decarbonization Strategy
Carbon dioxide (CO2) emissions account for ~75% of human-caused greenhouse gas (GHG) emissions and are driven by our fossil fuel based energy systems. The other ~25% is accounted for by methane and nitrous oxide emissions primarily from agriculture, forestry and other land use (AFOLU) and fluorinated gases used in cooling & refrigeration.
Our energy systems define how we obtain energy sources, convert, and deliver their embodied energy to end uses. Today, over 80% of the world’s primary energy supply comes from fossil fuels - coal, oil, and natural gas (see IEA for world energy balances). Combustion, or the reaction between these fuels and oxygen, releases their stored chemical energy as heat, with which we can do many useful things. Unfortunately, this reaction also releases carbon dioxide.
The goal is to transform our energy systems to achieve net zero carbon emissions. Shifting to clean energy with the support of electrification will drive the transformation, but we’ll also need to reduce energy demand and increase carbon capture.
Reducing energy demand through efficiency and behavioral measures helps reduce the scope of the carbon problem and makes the other tasks more manageable. It is the most mature of the three levers noted above.
Earth’s forests and oceans are natural carbon sinks, but are no longer enough given the pace of anthropogenic carbon emissions. Reducing energy demand and shifting fuel sources to clean energy via electrification will not achieve our net zero goals quickly enough, so we’ll need to deploy carbon capture technologies. This is the least mature of the three levers.
All three levers are important and need to be pursued in parallel. In the near term, I think the area poised for the most significant improvement is in shifting fuel sources to clean energy via electrification given commercial readiness and the room for impact.
Direct and Indirect Electrification
Electricity revolutionized energy systems. It helped put distance between power plants and the end use sites, shifting pollution away from cities. It also significantly expanded the array of end uses and ushered in an era of innovation including the information age. Now, it’s our key to decarbonization.
We have two methods: direct and indirect electrification.
Direct: Electricity is the final energy carrier to the end use application. We use conductive wires to directly power equipment via electric current.
Indirect: Use electricity to create another energy carrier better suited for a particular use. The most-discussed example is hydrogen (not a primary fuel source, but an energy carrier). It can store and move energy, but is obtained by converting a different fuel source. Today, hydrogen is primarily created via steam methane reforming with byproducts of carbon monoxide and carbon dioxide; this is known as ‘gray hydrogen’. However, hydrogen can also be created via electrolysis - essentially using electric current to split water into hydrogen and oxygen. If the electricity is from a clean energy source such as solar, the hydrogen can be considered ‘green’. Applying hydrogen produced via electrolysis to an end use can be considered indirect electrification.
Overview
The United States contributes nearly 15% of global GHG emissions on an annual basis, second to China, which contributes nearly 30%. Since I’m based in the US and have better visibility into its data and markets, let’s analyze electrification in the context of the US:
We could theoretically eliminate nearly all of CO2 emissions from transportation and buildings through electrification & clean energy. Ending the production of petroleum & natural gas would address nearly half of industrial emissions in the US (in reality, I don’t think we can or will completely end it, but that’s outside the scope of this post). Direct and indirect electrification of key industrial sectors (metals, minerals, chemicals, pulp & paper) could potentially address at least half of the remaining industrial emissions, although we have not yet solved all the core tech and commercial viability problems yet.
If we do a rough calculation based on the above statements, we could imagine that electricity + clean energy could theoretically touch at least 85% of CO2 emissions (100%*32% Electricity + 90%*34% Transportation + 75%*19% Industry + 100%*11% Buildings). The potential for this strategy is huge, although it’s unlikely we hit these theoretical figures.
Based on my very simplified ‘what-if’ analysis, assuming various electrification rates for different emissions drivers within each sector, we can get a feel for how much direct fossil energy use we might displace by 2030 and 2050. This is not a forecast modeling the multitude of complex variables, but does help illustrate the massive scope for electrification and also some significant challenges.
This model illustrates from today’s baseline (32% electrified):
- +10% by 2030
- +30% by 2050
- +50%, if more aggressive
The remainder would need to be addressed by demand reduction and carbon capture, and we assume electricity demand is supplied by clean energy.
See below for a summary of how much of each sector’s emissions might be addressed through electrification:
The analysis simplifies by directly translating electrification rate to percentage emissions “addressed”. While electrification is not directly eliminating emissions, but rather changing & displacing primary energy consumption, the back of the envelope math is appropriate for illustrative purposes as the assumptions are made for somewhat homogeneous sub-sectors.
Transportation
Transportation is the biggest target for electrification. With advancements in battery technology and charging infrastructure, electric vehicles will become mainstream over the coming decades. Smaller ground vehicles and fleets will lead the charge. Heavier transport and airplanes will take longer to electrify and may employ indirect electrification.
Battery Electric Vehicles vs. Hydrogen Fuel Cells
Both of these technologies are likely to have a role in transportation electrification. The momentum today is with battery electric vehicles (BEVs), but hydrogen fuel cell electric vehicles (FCEVs) have advantages that could be leveraged in particular applications.
Energy density is the most critical difference. Hydrogen provides nearly 34,000 Wh of energy per kg. Lithium ion batteries today provide around 300 Wh/kg, although having tripled in energy density over the last 10 years. Thus, for higher range or power applications such as payload hauling, hydrogen could provide the additional energy needed without adding significant weight.
Vehicles
The EV transition may happen faster than some think (see GM’s announcement to sell only zero emission cars by 2035, and Volvo by 2030). For light duty vehicles (passenger vehicles and small trucks), which drive 60% of the sector’s emissions in the US, BEVs will likely be the dominant solution given economics, momentum, and upcoming range improvements.
A few years ago, DNV GL forecasted that by 2030, 40% of all new cars sold in North America will be EVs. More recently, EPRI developed forecasts with BEVs comprising 10% or 35%+ of new car sales in 2030 in medium and high scenarios respectively. DNV GL’s forecast does not taper off like EPRI’s, which does take into account BNEF’s forecast (the next most bullish after DNV GL), but rather reaches nearly 100% of new sales by 2050!
The batteries drive the higher cost of EVs vs. ICE vehicles, so their cost decline and improvements in related power electronics & controls will be a key driver to mass adoption. Additionally, the pace of charging infrastructure deployment and corresponding business models will impact growth.
Beyond the fuel cell, the hydrogen pathway needs advances in electrolysis and distribution infrastructure for the technology to be a more competitive option. By the time that happens, BEVs will likely already have significant market share of light duty vehicles.
However, the particular needs of heavy payload applications may provide opportunity for hydrogen fuel cells. BNEF projects (see below chart) the total cost of ownership for class 8 trucks (i.e., tractor trailers) to decrease most significantly for FCEVs by 2025, but remain more expensive than BEVs and conventional diesel. There’s much work to do.
The EV shift won’t happen overnight and new cars with internal combustion engines (ICE) will continue to be sold. There are gains being made on engine thermal efficiency and there is scope for further reducing vehicle mass, friction, and resistance. Additionally, cars are a carbon intense mode of transportation with low vehicle occupancy rates. Urban design, including better accommodating walking & biking, and improving transit systems would increase transportation effectiveness.
Airplanes
Airplanes (10% of US transportation emissions) will take longer to electrify and may not fully electrify as a sector given fundamental differences from ground transport, making the sector a key target for efficiency improvements such as through aerodynamic design.
Companies such as Wright Electric are pursuing direct electrification (batteries), initially focusing on shorter range (i.e., few hundred miles) applications. Direct electrification may not be feasible for larger aircraft flying longer distances. Initially, these applications may move to lower carbon fuels. In the longer term, we might see engineering innovation result in direct hydrogen combustion for propulsion or the use of fuel cells.
Illustrative Impact of Electrification
Electrification of light duty vehicles is the largest driver (assumptions are based on public forecasts). Exponential growth could occur within the next decade with significant market share taking hold after 2030. Given the announcements by car companies to stop selling ICE vehicles in the next 10-15 years, I think there is good potential for EVs to reach fleet share beyond the EPRI high case.
We should at minimum address ~50% of current emissions through electrification by 2050 and hopefully go much further by nearly fully electrifying ground transportation. Again, this needs to be backed up by a shift in the electric power sector to clean energy.
Industry
The industrial sector uses natural resources and heat to make things. The majority of emissions are driven by burning fossil fuels for high temperature processes and from the byproducts of chemical reactions.
The US is the world’s top petroleum and natural gas producer and thus an extraordinary share of industrial emissions are attributed to onshore production, gathering & boosting, processing, refining, and distribution.
Beyond oil & gas, in the US and globally, industrial emissions are driven by steel, cement, and chemicals. These are target industries for shifting fuel sources and feedstocks via electrification.
Reduce the use of coal and natural gas for high temperature processes
Steel, cement, and chemicals production drive nearly two-thirds of industrial emissions. These industries rely on coal and natural gas, directly combusted on site, for process heat. The industrial processes need a lot of heat, particular ways in which heat is transferred, and high rates of heat transfer (flux). Given these requirements, direct electrification is not always an option, potentially not feasible in some cases.
Hydrogen is a potential fuel alternative since it can be burned, with the byproduct being water, and provide high temperature and flux. It can also be stored on site in liquid or compressed gas form to provide a reliable energy supply. Green hydrogen (“indirect electrification”) produced via electrolysis and a clean energy source is a potential path to decarbonize high temperature processes. We have not yet achieved cost-effective green hydrogen at scale today, but a combination of declining electrolyzer and electricity costs with regulation could help get there.
Let’s take steel as an example. Globally, about 30% of steel is produced via electric furnaces using scrap steel or direct reduced iron (DRI) as an input; the other 70% uses more conventional blast furnaces (BF) to turn iron ore into pig iron and basic oxygen furnaces (BOF) to turn pig iron into steel. The US is opposite the rest of the world, with nearly 70% of steel using electric furnaces. There is room to increase penetration of electric furnaces, especially outside the US. However for quality and supply chain reasons, including limits on the amount of steel scrap, we will still need to address the BF-BOF processes for virgin steel. Hydrogen could potentially be a fuel source for blast furnaces, but would require changes to the process and equipment.
A very recent pilot study in Sweden by Cementa and Vattenfall has shown that electrification of process heat for cement is also technically possible. This is in a very early stage so it will probably be a while until we see commercial application. Unfortunately for cement, the majority of emissions is not from heat, but from process emissions. Cement is probably the hardest industrial sector to decarbonize and will need changes in material composition.
Use lower or zero carbon content feedstocks, leveraging electricity
Beyond combustion for industrial heat, the chemical processes involved also drive emissions.
Hydrogen is already a feedstock for various chemical applications. For example, ammonia used in fertilizers and other industrial processes is created via the Haber-Bosch process combining hydrogen and nitrogen. Today’s hydrogen feedstock is primarily created via steam methane reforming from natural gas. This is a prime target to replace with green hydrogen.
The steelmaking process also may hold opportunities for hydrogen feedstock. Coke, which is a product of coking coal, is used as a reducing agent with iron oxide in a blast furnace to create pig iron; byproducts include CO2. Hydrogen could replace coke as the reactant; the byproduct would be water. The resulting reduced iron could then be used to produce steel via an electric arc furnace.
So, hydrogen as a fuel source (addressing the BF-BOF process) and reactant presents an opportunity to indirectly electrify much of the steelmaking process end-to-end. However, hydrogen cannot simply replace coke. Aside from differences in the heat transfer mechanism, coke provides physical strength to support the burden (i.e., the iron-based materials and other materials) that comes down the furnace. Implementing hydrogen, both as a fuel source and reactant, would require some fundamental process & equipment changes.
The hard-to-abate sector
As you can see, the industrial sector has unique electrification challenges. It is known as the “hard-to-abate” sector and will need more help from the other levers: reduce demand and carbon capture.
As a society, we need to move away from a “make - use - throw” economy to more of a “make - use - reuse / remake” approach. I recommend reading the report from the Ellen MacArthur Foundation and Material Economics, “How the Circular Economy Tackles Climate Change”.
Additionally, industrial processes will need to implement carbon capture at the factory level. Regulation can of course help move this along more quickly.
Illustrative Impact of Electrification
Industry is very unlikely to reach the same levels of electrification as transportation, but there is still significant opportunity. Note that outside the US, innovation in steel and cement decarbonization has an outweighed impact compared to what’s seen in the following chart. This will be particularly important for China, which is by far the biggest steel producer in the world and the biggest cement maker in the world.
Buildings
Buildings are the most electrified sector today, but heating drives significant fossil fuel use on site. In the US, natural gas provides roughly 8,000 TBtu of energy (~40% of total building energy use) to commercial and residential buildings and contributes to 80%+ of their direct fossil fuel CO2 emissions (see EPA).
Note that electricity related emissions are counted in “Electricity” and emissions embedded in building materials are counted in “Industrial”. Thus, the CO2 emissions discussed here are primarily a result of heating.
Many buildings use gas powered furnaces or boilers for heating. While electric versions are available, they may not be chosen for either cost or comfort reasons. For example, the higher heating capacity of gas vs. electricity has led the gas option to be favored for larger buildings. Where natural gas is cheaper than electricity, the operating cost of a gas boiler is lower.
Electric heat pumps offer a far more efficient option. A heat pump uses a fan, heat exchangers, refrigerant, and a compressor to move heat from outside to inside or in reverse. The transfer of heat rather than generation of heat allows for heat pumps to move on the order of 2 to 4 units of energy for every unit of energy consumed - i.e., energy efficiency of 200-400% vs. 90%+ for modern boilers. There’s a bright future for heat pumps if initial and operating costs continue to decline and if comfort issues can be addressed.
Unfortunately, heat pumps increase the amount of refrigerant in the built environment. Refrigerants (primarily hydrofluorocarbons - HFCs) are much more potent than CO2. For example, HFC-32 has a global warming potential (GWP) of ~675 - i.e., 1 kg of HFC-32 absorbs 675x the heat that 1 kg of CO2 does over 100 years. The damage begins when the refrigerant is released into the atmosphere through leaks or disposal. We need to identify & eliminate leakage, and widely deploy safe collection & disposal systems to address the bank of HFCs already in use. Going forward, we need to introduce less potent (or near zero GWP) alternatives.
Cookstoves demand much less energy in aggregate than heating, but in addition to the carbon emissions from burning gas, stoves are a source of indoor air pollution that can impact health, particularly in the absence of proper ventilation. Induction stoves can address both issues by electrifying cooking.
Illustrative Impact of Electrification
Conclusion
Direct and indirect electrification will eliminate the vast majority of fossil fuel burning at end uses across transportation, industry, and buildings by shifting significant energy consumption to the electricity system. With electricity generated from clean energy sources, we can eliminate the majority of carbon emissions.
Electricity could help address 60% to 80% of carbon emissions in the US, if not more.
Transportation: At least half to very highly electrified
- 50 - 90% of light duty vehicles electrified (mostly BEVs)
- 40 - 75% of mid and heavy duty electrified (BEVs and FCEVs)
- Potentially significant electrification of short and medium haul aircraft
Industry: Significant fossil fuel displacement possible
- Significant reduction of oil & gas production and refining as other sectors electrify
- Very high use of green hydrogen in key chemicals industries including ammonia
- Majority of steel production utilizing EAF or DRI-EAF
- Potential kiln electrification or green hydrogen for cement process heat
- Various other sectors addressed such as pulp & paper
Buildings: Vast majority to full electrification
- 75 - 95% of emissions addressed through electrification of space & water heating and cooking
In parallel to electrifying everything, we’ll continue to reduce energy demand through efficiency and also ramp up carbon capture technology to help where we fall short. We’ll also decarbonize power as much as possible. I think we will generate the vast majority of our electricity from clean energy in the future, but there are significant challenges we will need to address to get there...