The Bigger Picture

21 September 2019

The role of aluminium smelters in decarbonising our future

The International Energy Agency (IEA) predicts the future will be electric and mostly renewable.
For large industrial users of energy this brings both challenges and opportunity. Flexibility of energy use will become key, however.

When it comes to electricity demand... You haven't seen anything yet

The IEA state that to meet CO² reduction targets by 2050, global industrial process heat will need to be electrified.
Process heat represents 74% of industrial energy demand worldwide, of which only 10% is electrified, leaving some 76.5 EJ of energy to come from mainly the direct burning of fossil fuels (see figure 1). This amount of energy is staggering on any scale, it's the equivalent 21.25 million Gigawatt hours. To put that in perspective that's around 100 times Australia’s current total annual electricity generation.

This new demand for electricity will see the required global generation grow to around five times what we generate today.

So where is all this new electricity going to come from?

It's going to come from clean renewable energy sources (with some gas transition), and this is going to happen for four reasons:

  1. Public consciousness will demand it
  2. The levelised cost of building new renewables is already below the cost of operating existing coal and nuclear power generation, and will continue to fall
  3. Financing the cost of building new coal or nuclear electricity generation will become increasingly difficult, if not impossible
  4. Significantly for large industrial users, renewables for the first time can offer cheaper energy than the direct burning of fossil fuels

So, if the IEA is right and the future is electric and mostly renewable, what does this mean for large industrial users, both those in the grid today, and those seeking to enter.

EnPot global heat demand in industry

Figure 1
As CO² emissions from other sources decline, industry’s relative share of total emissions increases, as it progressively becomes the primary source of CO2 emissions by 2050. Source: Solar Payback (2017), based on IEA statistics and calculations by IRENA.

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