Sector Deep dive

Industry

The industry sector comprises manufacturing and mining - including the energy-intensive subsectors of metal production (iron and steel), processing of stones and earths (cement, lime, ...) and basic chemicals (AGEB, 2022). There are three major applications of energy in industry: Process heat (generation of steam, industrial furnaces), mechanical energy (engines, lighting), and space heating. In addition, there is non-energy use as feedstock in the chemical industry.

To reduce GHG emissions in the industrial sector, subsector-specific strategies are needed, which can be grouped into five categories: Fuel switching (e.g., replacing natural gas with renewable electricity), efficiency (resource-efficient use of materials and energy), innovative production processes (e.g., hydrogen-based direct reduction of iron ore), circular economy (e.g., greater use of scrap steel), and sufficiency (effect of reduced demand for energy-intensive products on the industry).

Between 1990 and 2020, greenhouse gas emissions from industry were reduced by about 36% (UBA, 2021) - the majority in the years following the German reunification. The Expert Council on Climate Change therefore concludes in its biennial report (Expert Council, 2022) that the reduction must be increased by a factor of 10 compared with the 2011-2020 period in order to achieve the climate targets for 2030.

2 ind.
6 ind.
step back
on track

Annual energy and process related GHG emissions of the industry sector

206% on track Compared to the scenario Technology Mix
One-off effect
Energy crisis

Annual GHG emissions of the industrial sector resulting from the use of fossil energy sources and in chemical processes of material processing. Not included are electricity and district heating generation (see transformation sector).

This is the main indicator for the sector's climate target achievement. It serves the European and international reporting requirements, and the German government's sector target also refers to it. For a successful transformation and the achievement of the climate targets, an almost complete avoidance of GHG emissions by 2045 is necessary in addition to the interim target of 2030 (about -95% compared to 1990 or about -92% compared to 2015).

Key points

  1. The reduction of GHG emissions must be significantly accelerated.
  2. Zero emissions will probably not be achieved in the industry sector.
  3. The indicator comprises energy-related and process-related GHG emissions, which must be addressed differently.

Annual energy and process related CO₂ emissions of the industry sector per GDP

299% on track Compared to the scenario Technology Mix
One-off effect
Energy crisis

This indicator relates the annual CO₂ emissions of the industrial sector to the economy as a whole, expressed in terms of gross domestic product. It thus shows the emission intensity of the sector.

The specific CO₂ emission intensity adjusts the industry sector's CO₂ emissions for growth effects. To reach the climate targets, a strong reduction in emissions is necessary, irrespective of economic growth.

Key points

  1. The CO₂ emission intensity of industry must fall to almost zero by 2045, similarly to absolute emissions.
  2. The combination of the two indicators enables an estimate of the success of the transformation by excluding the migration of industrial value creation as a potential sole cause of emission reduction.
  3. If absolute GHG emissions and emission intensity fall, a successful transformation can be assumed by substituting emission-intensive input factors while maintaining value creation.

Annual biomass demand in the industry sector

136% on track Compared to the scenario Technology Mix

This indicator shows the annual biomass use as an energy carrier in the industrial sector. Use as feedstock (in chemicals, wood processing and in paper production) is not included.

Biomass as an energy source has a tradition in industry in some sectors. There, it is mainly residual materials from production that are used, such as those from paper production or wood processing. These residual materials are often very attractive as energy sources because they are available on site and can therefore be used economically. Moreover, since the carbon they contain is biogenic in nature, they are rated as CO₂-neutral. The use of biomass can help meet sector targets.

Key points

  1. The use of biomass for energy can help to achieve the sector target for industry.
  2. From the perspective of the entire system, utilization beyond the limit set by the availability of residual materials must be viewed critically.
  3. Successful transformation scenarios probably do not expand use significantly. However, there can be large deviations.

Project pipeline of steel production via hydrogen-based direct reduction

215% on track Compared to the scenario Technology Mix

This indicator shows the physical steel production via the hydrogen-based direct reduction process. The actual historical data include existing and planned production.

Steel is produced in Germany predominantly in two processes: Primarily in the coal-based blast furnace route and secondarily in the scrap-based EAF (electric arc furnace) route. Substitution of the GHG-emission-intensive blast furnace route is an important prerequisite for impacting the indicators "Oil, coal and gas consumption in industry" and "Energy and process-related GHG emissions of the industrial sector" in terms of target achievement.

Key points

  1. Low-CO₂ steel production is key for achieving the climate targets of the industry sector.
  2. For primary production, hydrogen-based direct reduction is likely to be the technology of choice.
  3. According to the Ariadne target path, about 25 Mt of low-CO₂ production are needed by 2030, and about 40 Mt by 2045. Of this, about one third to one half is likely to be primary production.

Annual steel production via scrap-based secondary route

−120% step back Compared to the scenario Technology Mix

This indicator shows physical steel production in the secondary route (scrap-based). It is therefore also an indicator for increased circular economy.

Steel is produced in Germany predominantly in two processes: Primarily in the coal-based blast furnace route and secondarily in the scrap-based EAF (electric arc) route. Substitution of the GHG-emission-intensive blast furnace route is an important prerequisite for influencing the indicators "Oil, coal and natural gas consumption in industry" and "Energy and process-related GHG emissions of the industrial sector" in terms of target achievement.

Key points

  1. Low-CO₂ steel production is key for achieving the climate targets of the industry sector.
  2. The expansion of the secondary route is an important lever.
  3. By 2030, around 25 Mt, by 2045 40 Mt of low-CO₂ production is required according to the Ariadne target path - of which presumably around half is secondary production.

Final energy demand of the industry sector per gross domestic product

138% on track Compared to the scenario Technology Mix
One-off effect
Energy crisis

This indicator shows the final energy demand of the industrial sector measured in terms of gross domestic product. Decreasing values can indicate efficiency improvements.

This indicator is calculated as the ratio of final energy demand and gross domestic product. High values reflect high energy intensity - usually found in basic industries (high energy input, low value of the product). Decreasing values can indicate increasing energy and material efficiency or an increase in the value of the products. However, it also indicates a shift from basic industries (crude steel, basic chemicals) to further processing of products (mechanical engineering, pharmaceuticals).

Key points

  1. The indicator shows the energy intensity; it decreases as a result of higher efficiency.
  2. Decreasing energy intensity facilitates (or enables) successful transformation.
  3. “Energy efficiency first" is a central element of European and German energy policy.

Share of electricity in final energy demand of the industry sector

−594% step back Compared to the scenario Technology Mix

This indicator shows which share of the final energy demand of the industrial sector is supplied directly by electricity.

A robust outcome in the vast majority of successful transformation scenarios is the electrification of final industrial energy demand. The degree of direct electrification - as distinct from indirect electrification via hydrogen or synthetic fuels - depends on the scenario and can vary greatly.

Key points

  1. The degree of electrification of final energy demand increases - to a greater or lesser extent, depending on the Ariadne scenario.
  2. This growth is driven by new applications (electrified process heat) and overcompensates efficiency gains of traditional applications (motors, lighting).
  3. Delayed development may only be made up for by deep intervention in the production plant structure and is likely to be economically inefficient.

Annual oil, coal and gas demand in the industry sector

118% on track Compared to the scenario Technology Mix
One-off effect
Energy crisis

This indicator describes the annual demand for the most important fossil energy carriers in industry. Only energetic use is taken into account, not the use as feedstocks in the chemical industry.

The three most important fossil energy sources, oil, coal (lignite and hard coal) and natural gas, serve the majority of industrial energy demand in 2020. At 220 TWh, natural gas is the most (and broadest) fossil energy source used. Coals (88 TWh) are used predominantly (~⅔) in steel production. Oils (28 TWh) are used marginally but across all subsectors, with a focus on the chemical industry.

Key points

  1. In 2020, the fossil energy sources oil, coal and especially natural gas are the backbone of the industry's energy supply.
  2. Successful transformation requires almost complete replacement: remaining fossil use is compatible with a successfully transformed energy system only under very narrow conditions.
  3. In the past, the use of fossil energy sources has already been greatly reduced, but this must be accelerated significantly.