Decarbonize or disappear. Alicia Carrasco, October 2023

The urgent need to decarbonise and degassing heat consumption

The industrial sector plays a fundamental role in Spain’s economy, generating employment and contributing to the country’s development. The manufacturing industry accounts for 11.3% of our country’s GDP, but this sector is also one of the main contributors to GHG emissions. According to data from the Ministry for Ecological Transition and the Demographic Challenge, in 2019 the manufacturing industry was responsible for 22% of the final consumption of fossil fuels, which gives an idea of the urgent need to decarbonise and degassing industrial heat consumption to achieve the goal of climate neutrality by 2050.

For this reason, industrial decarbonisation has become an unavoidable priority in the fight against climate change. In this context, the search for solutions for industrial decarbonization has taken a significant step in the right direction. The Industrial Decarbonisation PERTE, backed by a total investment of €11.6 billion, of which €3.1 billion comes from the public sector, has established itself as an essential resource to drive this transition towards a more sustainable industrial sector.

On the other hand, the measures included in the National Integrated Energy and Climate Plan (PNIEC), which are partly enhanced by the implementation of this PERTE, project a significant reduction of more than 20 million tons of_CO2 equivalent between 2019 and 2030. This commitment not only strengthens initiatives to support the value chain and the decarbonization of the industry, but also emphasizes the importance of energy efficiency, the use of renewable sources and the circular economy to improve long-term competitiveness. In addition, these measures are aligned with the European vision expressed in the European Commission’s “Green Deal Industrial Plan”, published in February 2023, and with the proposal for the “law on net-zero emissions industry” presented in March of the same year. The synergy between these national and European efforts promises to pave the way towards a more environmentally friendly and economically sound industry.

However, this objective is threatened by other pressing problems for the industrial sector, such as the increase in fuel and raw material prices or the disruption of supply chains, as well as geopolitical factors such as the Russian invasion of Ukraine or the recently reactivated conflict in the Middle East, challenges that negatively affect the weight of industry in Spain’s GDP. On the other hand, the industrial sector is going to find itself with more and more legal restrictions in order to emit greenhouse gases or atmospheric pollutants, and a foreseeable rise in the price of emission rights for all those sectors that are in ETS, so it is urgent to accelerate the decarbonisation of a key sector for the economy of our country.

But how do you decarbonise high industrial heat consumption?

Industrial heat consumption in Spain is very high and much of this heat is generated by burning fossil fuels, which contributes significantly to_CO2 emissions. This excess of GHG emissions not only affects the environment, but also goes against the commitments made by Spain within the framework of the Paris Agreement and European decarbonisation policies, which have set the European Union to be climate neutral by 2050.

One of the main obstacles to the transformation of the industry in Spain lies in the lack of adequate technologies to decarbonise production processes. Despite technological advances, many industrial companies lack viable solutions to reduce their carbon emissions without compromising their efficiency and competitiveness.

In addition, the economic helplessness of industrial producers is an added problem. The investment required to implement new technologies and more sustainable production systems is significant, and companies face difficulties in financing these projects without adequate support. This creates a cycle of immobility, as many companies feel trapped in outdated and polluting systems due to financial constraints.

The adaptation of production processes to restrictive deadlines, together with the need for considerable investments, is a critical challenge faced by companies in the sector. The economic viability of these companies is crucial, as competitiveness and potential offshoring are at stake. In fact, the current resources that will materialize in aid through the PERTE are insufficient to meet the needs of the sector.

In addition, the aforementioned competitiveness ends up being unequal in the European market, with state aid from other countries, adding complexity to the decarbonization process in Spain. Other European countries have invested significantly more in their industries and have started addressing decarbonization earlier. By comparison, Spain appears to be lagging behind in terms of funding and realistic timelines for decarbonization.

Another challenge facing the industry in Spain is the slow adaptation of new energy models. Despite efforts by governments and European institutions to promote the transition to cleaner energy sources, the industry still shows a resistance to abandoning fossil fuels in favor of more sustainable options.

The most interesting solution: exploiting technologies under development for specific projects

To address this set of challenges, it is essential to explore and exploit technologies that already have a level of commercial development, but have not yet been used to their full potential. Carrying out specific projects that take advantage of these technologies can be an important first step in demonstrating their effectiveness and viability in the Spanish industrial context.

It is also necessary to carry out comprehensive planning that allows industrial companies to be aware of the technological reality and the opportunities that exist for decarbonisation. This involves identifying appropriate technologies, evaluating costs and benefits, and formulating implementation strategies that are tailored to each company’s needs and capabilities.

A crucial aspect of accelerating this transformation process is financial support and government aid. It is essential that the Spanish authorities develop specific support programmes that support industrial companies in the adoption of cleaner and more sustainable technologies. Currently, there are grants such as those for thermal storage from the IDAE (Institute for Energy Diversification and Saving) recently closed in September 2023, although greater clarity and dissemination is needed on how to access them and how they can be applied in specific projects.

On a technological level, green hydrogen is postulated as a crucial player in this transition, but its full adoption may face obstacles, such as long deadlines to develop sustainable projects and dependence on regulatory developments and slow processes for obtaining aid. At the same time, other technologies such as heat pumps encounter limitations in operating temperatures that make them discarded in many evaluations by decarbonization teams in the industry.

For this reason, an alternative solution is found for certain industrial sectors whose thermal needs are lower (below 450 ºC) such as chemicals, paper, textiles, food, some ceramic processes, gypsum, etc. whose representation in industrial energy consumption in Spain is very decisive, thermal storage.

Currently, there are thermal storage technologies that decarbonize and electrify industrial systems with renewable heat generation. In Spain, an unmissable opportunity arises due to the direct synergy of this type of system with the massive generation of renewable generation.

A concrete example of technology that can contribute to the decarbonisation and electrification of industry in Spain is the one proposed by the German company LUMENION. This company has developed an innovative heat storage technology that can play a crucial role in the transformation of industrial processes.

Since its creation, the company LUMENION, a member of the econnext group, has worked all over the world on cases of direct application in the paper, food, brewing, beverage and chemical industries, among others, decarbonizing heat consumption in the form of steam, water or industrial oils. Its presence in Europe is gaining great strength, highlighting countries such as Germany, Spain and Portugal, as well as collaborating partners at different levels and processes such as the company Vattenfall [resto de partners/empresas del grupo econnext]

LUMENION’s thermal storage system is based on steel, making it highly efficient and capable of retaining large amounts of thermal energy for long periods of time. This allows industrial companies to store heat during times of high renewable energy availability and use it when needed, thereby reducing their reliance on fossil fuels and gas.

In addition, this technology has the versatility to provide both heat and electricity, making it a comprehensive solution for the decarbonization and electrification of industry.

Therefore, the need to decarbonise and degassing industrial heat consumption in Spain is a challenge that cannot be ignored and on which olivoENERGY has focused.

“As an energy transition consultancy that works on the promotion of new business models for the decarbonisation of the economy, we identify the need to decarbonise industrial heat as a key to reducing GHGs while providing the Spanish industrial sector with solutions that provide them with energy autonomy and improve the competitiveness of their production processes,” says Carlos Alcaide, Project Manager at olivoENERGY.

The lack of a wide and well-known range of appropriate technologies, the economic limitation of companies and the resistance to change are barriers that must be overcome. The exploitation of developing technologies, comprehensive planning, and government support are key to moving towards a more sustainable industry. Examples such as LUMENION demonstrate that there are viable and effective solutions that can contribute to this transformation. The future of the industry in Spain depends on the willingness to adopt a cleaner and more sustainable approach, which will not only reduce_CO2 emissions, but also strengthen the competitiveness and resilience of this crucial sector.

Alicia Carrasco

CEO of olivoENERGY

Member of the Private Foundation for Business and Climate.