How Electrification of Industrial Processes Can Help Fight Climate Change

In the late 19th century, manufacturing plants began adopting electrification as a way to save money. Now, more than two centuries later, industrial electrification is experiencing a renaissance: from New Jersey’s transshipment terminals to New Zealand’s steelmaking, industrial operations are turning to electrification more than ever before.

But today’s electrification isn’t just about saving money – it’s about saving the planet.

Electrification is the conversion of a device, system, or process that is dependent on non-electrical energy sources to one that is powered by electricity. In the context of sustainability initiatives, electrification technologies use renewable electricity, which is electricity that comes from solar energy, wind energy, and other clean, renewable sources.

As such, electrification has become key to supporting the global transformation to renewable energy, a central aspect of the movement to decarbonize the economy, achieve net-zero emissions and mitigate climate change. As the IBM Institute for Business Value notes, “aggressive action on decarbonization is needed,” and electrification across industries in particular is emerging as a “critical imperative.”

The impact of industry on climate change

The industrial sector is energy intensive, accounting for 37% of global energy consumption. Its energy consumption has a significant and growing carbon footprint: industrial emissions have increased by 70% in the past two decades, and industrial companies are responsible for about a quarter of global carbon dioxide emissions.

Industrial emissions are driven by both energy consumption and the type of energy used. According to the International Energy Agency (IEA), industrial energy use is still “dominated” by fossil fuels. Coal has long been the most popular fuel in industrial operations, and in 2022, the total share of fossil fuels (including natural gas and oil) in the industrial sector’s energy mix was 67%. Reducing emissions will require a shift to cleaner, renewable energy in industrial processes.

Electrification begins.

Electrification in action: from boilers to forklifts

Successful, sustainable electrification requires replacing fossil fuel-powered means of production with electric technologies and equipment. Examples include:

Process heating electrification: Industrial process heating is a key step in the production of everything from materials such as steel and cement to consumer products such as appliances and cosmetics. Heating accounts for a significant portion of on-site energy consumption, as most of it occurs at high temperatures—400°C (752°F) or higher. Because energy demand is typically met by burning fossil fuels, process heating contributes 30% of greenhouse gas (GHG) emissions from manufacturing plants. Electrification offers an environmentally friendly alternative. Using electromagnetic heating technologies, electric boilers, electric furnaces, and industrial heat pumps can help industries significantly reduce greenhouse gas emissions. In New Zealand, for example, switching a steel mill to an electric arc furnace is expected to reduce emissions by at least 45%.

Electric motors: Gas turbines and steam turbines (fueled by fossil fuels) power various types of rotating machinery, such as fans and compressors. Replacing such turbines with clean-energy electric motors can reduce emissions in a variety of industrial facilities, including natural gas compression stations. (Natural gas is often considered a “bridge fuel” to complement renewables.) Compression stations have traditionally used industrial gas turbines, but that is changing. For example, as of 2023, more than 300 compression stations in Europe rely on electric motors.

Electric vehicles: Greenhouse gas emissions also come from the heavy use of on- and off-road vehicles powered by fossil fuels, from trucks that move materials and goods along supply chains to forklifts in manufacturing plants and ports. Switching to electric vehicles is another way to significantly reduce emissions in these spaces. At the Elizabeth, N.J., transshipment terminal, for example, port operators estimate that a new initiative to deploy electric terminal tractors will prevent 1,100 tons of greenhouse gas emissions per tractor per year.

Installing electric heating and cooling systems, such as heat pumps, is also a path to decarbonization in industrial facilities. However, there is less research on these initiatives compared to research on the electrification of heating and cooling systems in homes.

Beyond Emission Reductions: Other Benefits of Industrial Electrification

While the potential to reduce greenhouse gas emissions is a key driver of electrification worldwide, business leaders typically have another motive in mind: their bottom line.

Indeed, electrification can provide long-term cost savings for industrial companies. Electrical equipment tends to have lower maintenance costs while providing greater energy efficiency. In recent years, electricity prices and renewable energy prices have also compared favorably with the costs of fossil energy sources, including fossil fuel-based electricity generation.

In addition, electrification can have a positive impact on the health of workers. This is because electric vehicles and equipment do not emit harmful air pollutants. Replacing fossil fuel-powered machines and vehicles with electricity can improve indoor and outdoor air quality, reducing the likelihood of negative health effects for workers.

Electrification can also help companies achieve their ESG goals and gain acceptance from stakeholders such as investors and customers, which is why electrification initiatives regularly appear in companies’ sustainability reports.

Taking on the challenges of industrial electrification

Despite the benefits of electrification, there are barriers to its adoption. Among them are high upfront costs. While electrification saves money in the long run, replacing fossil fuel systems with electric systems can be expensive, if not uneconomic. Government incentives are helping to make industrial electrification more affordable. From California to Finland to New Zealand, policymakers have subsidized investments in electrification for energy-intensive industries. Major initiatives include Europe’s REPowerEU plan and the U.S. Department of Energy’s industrial decarbonization investment.

The resilience and capacity of current power systems pose another major challenge. As industries electrify more equipment and vehicles, the resulting increase in electricity demand has the potential to overwhelm electrical grids. Various government programs around the world are aimed at helping grid operators upgrade infrastructure and increase capacity, but more policies are needed, according to the IEA analysis.

Technological solutions supporting the electrification of industry

While physical infrastructure improvements are key to strengthening energy systems in the face of increasing electrification, software solutions can also play a key role. For example, IBM® Environmental Intelligence Suite enables industries and energy providers to anticipate and prepare for disruptive environmental conditions, with capabilities to predict power outages, forecast renewable energy generation, and more.

Explore the IBM Environmental Intelligence Suite and learn more about sustainability trends below.

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