Joint Report by LBNL, Energy Innovation, and Energy Research Institute of China: Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options

June 11, 2024

On May 21st 2024, Lawrence Berkeley National Laboratory (Berkeley Lab) and Energy Innovation co-hosted two webinars, in both English and Chinese, to launch its report: Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options. The webinars were attended by over 70 participants, with participants from governmental agencies, universities, international non-governmental organizations, and think tanks from China, Europe, and the U.S.

In the webinars, Dr. Nik Sawe, Jeffery Rissman, Hongyou Lu, and Dr. Nan Zhou presented key findings from the report. Participants also engaged actively and exchanged ideas on policy options to overcome barriers and accelerate adoption of electrified heating technologies.

The report found that direct electrification is the most practical means of supplying industrial heat efficiently at the required scale, which is critical for China to achieving its climate targets since China’s manufacturing sector accounted for 61% of the country’s CO2 emissions and nearly three-quarters of which is related to industrial process heating.

The authors conducted techno-economic comparisons of two electrified heat technologies – industrial heat pumps and thermal batteries – and their alternatives in China (Figure 1). The analysis found that lower-temperature industrial heat pumps are the second-cheapest option (after coal-fired boilers) in China today in terms of levelized cost of heat (LCOH), and can have the lowest LCOH when potential policy or market interventions (e.g., carbon pricing) are considered. Higher-temperature industrial heat pumps have higher cost at present, but may become more competitive as RD&D grows in this area. Industrial thermal batteries which can supply much higher temperatures are already cost-competitive with natural gas alternatives. In addition, the report showed that direct electrification, especially when coupled with fast decarbonization of the grid can provide significant environmental and public health benefits.

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Figure 1. a. Levelized cost of industrial heat production of electrified technologies and alternatives in China in 2021; b. Final energy consumption per unit of heat production in China; c. CO2 emissions per unit of heat production by technology in 2021; d. CO2 emissions per unit of heat production in China in 2050; e. Conventional pollutant emissions per unit of delivered heat in China in 2021; f. Conventional pollutant emissions of per unit of delivered heat in China in 2050.
Figure 1. a. Levelized cost of industrial heat production of electrified technologies and alternatives in China in 2021; b. Final energy consumption per unit of heat production in China; c. CO2 emissions per unit of heat production by technology in 2021; d. CO2 emissions per unit of heat production in China in 2050; e. Conventional pollutant emissions per unit of delivered heat in China in 2021; f. Conventional pollutant emissions of per unit of delivered heat in China in 2050. 

The report recommended policies to overcome economic, technical, and infrastructure barriers to industrial electrification in China. Policymakers can incentivize the transition using equipment rebates, retooling grants, and access to low-interest financing mechanisms to offset the capital expenditures related to adopting these technologies. Meanwhile, enhancing existing energy-efficiency standards, emissions standards, and green public procurement programs can likewise encourage the transition to direct electrification. The report was also featured in Forbes and Axios.