Deep decarbonisation of the German industry via electricity or gas? A scenario-based comparison of pathways

The industry sector accounts for about 20 % of GHG emissions in Germany. Achieving long-term GHG neutrality also requires industrial emissions to approach zero in the long-term. The German government set an intermediate industry sector target in the range of 49 to 51 % emission reduction by 2030 compared to 1990. While the targets are set, it is yet mostly unclear which technology path industry will and can take towards decarbonisation. Various measures including energy efficiency, biomass, electrification, green hydrogen, power to gas (PtG), circularity, material efficiency, process switch and carbon capture and storage are on the table, but their individual contributions are highly debated. We present results of a comprehensive bottom-up assessment comparing two alternative scenario pathways to 2050. The first is based on electrification as the main decarbonisation option, while the second builds on the broad availability of green gas. We use the bottom model FORECAST, which containsa high level of technology and process detail. E.g. more than 60 energy-intensive processes/products are included as well as a detailed stock model of steam generation technologies. Results show that both scenarios reach a GHG reduction of about 93 % in 2050 without using carbon-capture and storage. Remaining emissions are mostly process-related. This requires a fundamental change in industrial energy supply and use, but also in the industrial structure including entire value chains. The electrification scenario experiences an increase of direct use of electricity of about 100 TWh or 50 % by 2050 compared to 2015 plus additional 146 TWh green hydrogen. In the gas focused scenario electricity demand remains stable, while a demand for 337 TWh of green gas emerges by 2050, mainly replacing natural gas use, but also coal in the steel industry and feedstocks in chemical products. Both scenarios assume a substantial improvement in-energy efficiency and material efficiency along the value chain for CO2-intensive products as well as a strong shift to a circular economy. E.g. the secondary steel route gains market share from about 30 % in 2015 to 60 % in 2050. In the basic materials industries a process switch to low-carbon production routes takes place assuming the market introduction and fast diffusion of low-carbon technologies, which are today only at pilot or demonstration scale. In addition, the electrificationscenario also requires a carbon source for the hydrogen-based olefine production. Here, we assess the option to use remaining process-related CO2 emissions from lime and cement plants. Such fundamental change in the industrial structure can onlyhappen when the regulatory frame is adapted and addresses the major challenges ahead. Among these are for example the higher running costs of CO2-neutral processes, the expansion of infrastructure, the effective implementation of CO2 price signals along the value chains and the reduction of uncertainties regarding large strategic investments in low-carbon processes.