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© Fraunhofer ISI Deep decarbonisation of the EU industry - A model-based assessment of alternative pathways Tobias Fleiter, with contributions from Matthias Rehfeldt, Andrea Herbst, Marlene Arens Fraunhofer Institute for Systems and Innovation Research Smart Energy Systems Conference, September 10 2019, Copenhagen
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Page 1: Deep decarbonisation of the EU industry - A model-based … · Deep Eutectic Solvents (Provides) Dissolving ligno-cellulose raw material as used for paper production Grass paper (Creapaper)

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Deep decarbonisa t ion of the EU indust ry -A model -based assessment of a l te rnat ive

pathways

Tobias Fleiter, with contributions from Matthias Rehfeldt, Andrea Herbst, Marlene Arens

Fraunhofer Institute for Systems and Innovation Research

Smart Energy Systems Conference, September 10 2019, Copenhagen

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AGENDA

1. Background: Industry decarbonisation and innovations2. Alternative scenarios for deep decarbonisation3. A Paris-compatible industry sector: 95% reduction scenario4. Conclusions

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Background : Indus t ry decarbon isa t ion & innova t ions

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Deep decarbonisation not possible via BAT energy efficiency and traditional fuel switch

Innovative low-carbon technologies are needed

Today ’s ava i lab le techno log ies a re no t su f f i c ien t fo r decarbon isa t ion

Coke technically required in blast furnace

Strong reliance on natural gas (also as feedstock)

High temperature limits use of renewables

Strong reliance on natural gas, mostly high

temperature

Process emissions chemically linked to

production

Strong reliance on refinery gas

Decarbonisation challenges Decarbonisation challengesEmission sources 2015, EU

760 MtCO2-equ

50%

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Carbon concrete (C3)Carbon nanofibres reinforced

concrete replacing steelconcrete

Source: http://www.graspapier.de/

Many process innova t ions are underdeve lopment

Solidia concreterecarbonating cement for

precast concrete

SuSteel (VoestAlpine)H2 based reduction of iron ore using

plasma technology

Source: Towards the EU ETS Innovation fund workshops (online available)

Siderwinn (ArcelorMittal)Fully electric steelmaking

via electrolysis

Hybrit (SSAB)H2 direct reduction of iron

ore with EAF

https://www.greencarcongress.com/2016/04/ssab.html

Deep Eutectic Solvents (Provides)Dissolving ligno-cellulose raw material as

used for paper productionGrass paper (Creapaper)

Grass based fibres replacing wood fibres

Source: http://www.graspapier.de/

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A l te rna t i ve indus t ry sec to r decarbon isa t ion scenar ios

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8 Scenar ios a re de f ined and s imu la ted

Scenario name Main scenario philosophy

1) Ref Current trends & policies

2) BAT Today's best available technologies

3a) CCS ~ -80% GHG, focus on CCS

3b) Clean gas ~ -80% GHG, focus on renewable hydrogen and synthetic methane

3c) Bioeconomy& circulareconomy

~ -80% GHG, focus on biomass as fuel and feedstock and circular economy.

3d) Electrification ~ -80% GHG, focus on direct use of electricity

4a) „Balanced mix“ -80%

~ -80% GHG, balanced mix informed by costs and potentials

4b) „Balanced mix“ -95%

~ -95% GHG, Balanced mix informed by costs and potentials

noin

no-v

atio

nsG

HG

redu

ctio

n>8

0%. (

ref.

1990

)In

clud

ing

inno

vatio

nsw

ithTR

L >4

• Bottom-up simulation• High technology detail• Country level• Policy instruments

Simulation

Energy-intensive Processes

Drivers: Production, value added, employment, end-user energy prices

Saving option dif fusion

Buildings stock model

Heating systems stock model

End-use energy balance

Saving options dif fusion

System ef f iciency

Steam generation stock model

Fuel sw itch

Results by sub-sector, energy carrier, temp. level, end-use, country

Space heating & cooling

Steam & hot w aterElectric motors& lighting

Furnaces

Macro

Material ef f iciency Circular economy

Calibration

Cross-cuttingBottom

-up

Regional analyses

Structural change

Carbon capture and storage

Hourly demand & demand response

Excess heat potentials

Drivers- GDP- Population- Energy prices- Temperature- Business cycle

Policy- Taxes- CO2-price- Standards- Grants- OPEX support

Technology & Behaviour

- Ef f iciency- Savings- CAPEX, OPEX- Learning- Emissions- Lifetime- Preferences

Input data

Structure- Energy balance- Emissions

balance- Technology

distribution

Results

Energy demand- Final energy- Delivered energy- Useful energy

GHG emissions- Energy-related- EU ETS- Process related

Costs- Investment- Policy cost- Energy spending

Indicators- Levelised costs

of process heat- Energy savings- Technology and

fuel mix - SEC by process- Technology

Market shares - CHP generation- Frozen ef f iciency- Heat and cold

temperatures

Process energy demand

Interfaces and add-ons

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The FORECAST mode l combines 6 sub-modu les

More information: https://www.forecast-model.eu/

Energy-intensive Processes

Drivers: Production, value added, employment, end-user energy prices

Saving option dif fusion

Buildings stock model

Heating systems stock model

End-use energy balance

Saving options dif fusion

System ef f iciency

Steam generation stock model

Fuel sw itch

Results by sub-sector, energy carrier, temp. level, end-use, country

Space heating & cooling

Steam & hot w aterElectric motors& lighting

Furnaces

Macro

Material ef f iciency Circular economy

Calibration

Cross-cuttingBottom

-up

Regional analyses

Structural change

Carbon capture and storage

Hourly demand & demand response

Excess heat potentials

Drivers- GDP- Population- Energy prices- Temperature- Business cycle

Policy- Taxes- CO2-price- Standards- Grants- OPEX support

Technology & Behaviour

- Ef f iciency- Savings- CAPEX, OPEX- Learning- Emissions- Lifetime- Preferences

Input data

Structure- Energy balance- Emissions

balance- Technology

distribution

Results

Energy demand- Final energy- Delivered energy- Useful energy

GHG emissions- Energy-related- EU ETS- Process related

Costs- Investment- Policy cost- Energy spending

Indicators- Levelised costs

of process heat- Energy savings- Technology and

fuel mix - SEC by process- Technology

Market shares - CHP generation- Frozen ef f iciency- Heat and cold

temperatures

Process energy demand

Interfaces and add-ons

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Low-carbon innova t ions w i th TRL > 4 a re inc luded in the scenar ios

Mat

eria

ls in

dust

rydo

wns

tream

Clusters of mitigation options 1 2 3 4 5 6 7 8 9

Energy and process efficiency

Fuel switch

Carbon capture and storage (CCS) and CCU

Recycling and re-use

Material efficiency and substitution

Technology readiness level (TRL) ->

Black liquor gasification

Electricity for process

heat

Near net shape casting

Top-gas recycling

Electrolysissteel H2 plasma

smelting

High quality EAFCement from recycled concrete

Oxyfuel CCS

carbon reinforcedconcrete

Low-carbon cement

CO2-efficient material use

Post-combustion

CCS

H2-DRI+EAF

Paper

Steel

Cementcut-off

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Ma jo r rema in ing emiss ion sources a re coa l , p rocess emiss ions and gas

Coal and fuel oil are substantially reduced in most decarbonisation scenarios

Process emissions, natural gas and to less extent coal are remaining emission sources in 2050

GHG emissions by scenario and source EU28

-400

-200

-

200

400

600

800

1.000

1 R

ef

2 BA

T

3a C

CS

3b C

lean

Gas

3c B

ioC

ycle

3d E

lect

ric

4a M

ix80

4b M

ix95

2015 2050

Mt C

O2-

equ

Process emissions Coal Fuel oilNatural gas Other fossil Waste non-RESCaptured emissions

-95%

-80%

60 Mt CO2-equ

240 Mt CO2-equ

2015: 665 Mt CO2-equ

-37%

1990: 1200 Mt CO2-equ

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A 95% reduc t ion scenar io fo r the EU indus t rysec to r

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GHG reduction of 95% (vs 1990) and 92% (vs 2015)

Remaining emissions mainly in processes

CCS in cement and lime enters in 2030

95% GHG reduc t ion poss ib le w i th m ix o f measures

Scenario 4b Mix95- GHG emissions by source, EU28

-100

-

100

200

300

400

500

600

700

800

2015 2020 2025 2030 2035 2040 2045 2050

GH

G E

mis

sion

s [M

t CO

e-eq

u]

Scenario 4b Mix95Waste non-RESProcessemissionsOther fossil

Natural gas

Fuel oil

Coal

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A foss i l - f ree f ina l energy demand in 2050

349 TWh demand for synthethic methane and 700 TWh for H2 in 2050

Direct electricity demand increases from 1041 TWh in 2015 to 1550 TWh in 2050

Hydrogen (480 TWh) and synthetic methane (370 TWh) gain high shares

Fossil fuels are (nearly) completely phased out

Scenario 4b Mix95 – final energy demand, EU28

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Ene

rgy

dem

and

[TW

h]

Scenario 4b Mix95

Hydrogen (feedstock)Biomass (feedstock)Natural gas (feedstock)Naphtha (feedstock)Synthetic methaneHydrogenBiomassOther RESWaste non-RESSolar energyOther fossilNatural gasFuel oilElectricityDistrict heatingCoalAmbient heat

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(Renewab le ) E lec t r i c i t y demand i s t r i p l i ng

Electricity demand triples (1041 -> 3102 TWh)

Hydrogen:

Steel industry with H2-DR replacing oxygen steel

Chemical industry (ammonia, methanol and ethylene)

Synthetic methane / clean gasin all sectors fed into gas grid

Electric process heating, e.g.

Glass melting

Indirect fired clinker furnace

Electric boilers for steam

Heat pumps

Electricity incl. generation of e-fuels, EU28

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MAIN CHANGES BY SECTOR BY 2050

Mitigationoption

Sector

Integrated process improvement

Fuel switch CCS Recycling andre-use

Material efficiencyand substitution

Iron and steelBAT + Near Net shape casting

H-DR, plasma, electroysis steel 100% replace BOF-steel

- Scrap-basedEAF (40->77%) for new products

Substitution by wood; Higher material efficiency; Reinforced steel

Basic chemicals

BAT + Chlorine oxygenedepolarized cathode

Selective membranes

Electric boilers, clean gas; H2 for ethylene, ammonia, methanol (100%)

- AmbitiousPlastics recycling

Plastics replaced bybio-based materials, reduced fertilizerdemand

Cement and limeBAT + Low-carboncements 100% replaceOPC; minimum clinker use

Clean gas co-firing CCS forlime andclinker

Concreterecycling and re-use

Efficient concrete use,concrete substitutes, use of low-clinkerconcretes

Glass andceramics

BAT + Oxy fuel, excessheat use

Electric melting (80%),clean gas

- More re-use, inccrease in flat glass recycling

More efficient glass use

Pulp and paperBAT + Innovative paperdrying, enzymes, blackliequor gasification

Electric boilers, biomass, clean gas?

- Maximum paperrecycling and re-use

Improved material efficiency

Refineries BAT Electricity, clean gas CCS - Demand-side driven

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95% scenar io requ i res fas t and comple te d i f fus ion o f l ow-carbon p rocess innova t ions

0%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

(Portland) Cement

Conventional OPC Low Carbon cement 95Low carbon cement 70 Low Carbon cement 50Less carbon cement 30

0%20%40%60%80%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

Ammonia & methanol

H2-based Conventional

0%20%40%60%80%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

(Primary) Steel

Plasma steel DRI RES Electrolysis

DRI RES H2 Conventional BOF

00,20,40,60,8

1

2015 2030 2040 2050

Prod

uctio

cap

acity

Glass

Electric melting Conventional melting

Assumptions Market entry in ~2030

Reaching saturation in 2050

Requires replacement of entire capital stock within only 20 years

Technologies need to be ready for fast market introduction by 2030

Share of production routes by product capacity (EU28)

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Summary : Innova t ions fac i l i t a te decarbon isa t ion o f EU indus t ry

Introduction

Agenda Results

Scenarios

Innovations

95% scenario

Conclusion

1

2

3

4

5

Available technologies not sufficient for decarbonisation of EU industry

>80% decarbonisation is possible if innovations at least at pilot scale (TRL5) are included,

If CCS and biomass are excluded, electricity plays a major role

Many low-carbon process innovations are at pilot or demo scale(TRL > 4)

95% reduction is possible with innovations, CCS, hydrogen, synthetic methane, electrification, circularity and material efficiency

In short: A fundamental change of the industrial production system

While major changes occur after 2030, technologies will need to be developed, tested and enter the market at industrial scale before

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Phase 4 needs to make the process innovations ready for large-scale market entry in 2030 latest

The EU ETS needs to make new solutions cost-effective, e.g. technologies with high operational costs due to hydrogen or electricity use

The ETS needs to generate sufficient trust to allows for billion euros investments to take place

Innovations in material efficiency and circular economy require effective price signals along the entire value chain

I s the EU ETS su f f i c ien t to ach ieve deep decarbon isa t ion o f indus t ry?

0%20%40%60%80%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

(Primary) St eel

DRI RES H2 Convent ional BOF

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Thank you fo r your a t ten t ion !

Contact: [email protected]

Download report and data:

Fleiter, T.; Herbst, A.; Rehfeldt, M.; Arens, M. (2019): Industrial Innovation: Pathways to deep decarbonisation of Industry. Part 2: Scenario analysis and pathways to deep decarbonisation. ICF and Fraunhofer ISI.https://www.isi.fraunhofer.de/de/competence-center/energietechnologien-energiesysteme/projekte/pathways.html#tabpanel-3

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The methodo logy combines mul t ip le da tasources

Framework data until 2050 Industrial production

• Value added• Energy and CO2 prices• …+ Sensitivities

Technology data (task 1 results)

• GHG savings• Energy savings• CAPEX and OPEX• Lifetime (economic/ technical)• TRL• Market entry data• Diffusion boundaries

Model database• Process data• Energy balances• BAT technologies• Behavioral

parameters

FORECAST

Bottom-upmodel

Scenario definition1. Incremental improvement2. BAT deployment3. Decarbonisation scenarios technology focus (3 a-d)4. Decarbonisation scenarios “Balanced mix” (4 a-b)

8 Scenarios

Results: • GHG emissions until

2050 by source, sub-sector and country in 10-year steps

• Energy demand by energy carrier

• Investment and energy expenditures

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Example scenar io de f in i t i on I ron and stee lMitigation

option

Scenario name

Integrated process improvement

Fuel switch CCS Recycling and re-use

Material efficiencyand substitution

1) REF Incrementalefficiencyimprovements

Fuel switch driven byprices

No CCS Slow increase accordingto current trends

No substantial improvement

2) BAT Fast deployment ofBAT efficiency

Fuel switch driven byprices

No CCS Faster increase EAF: Used for construction steel, others

= 1)

3a) CCS Energy efficiency innovations > TRL4

• Near Net shape casting

• Top-gas recycling

Fuel switch driven byprices

Post-combustionCCS

= 2) =1)

Hydrogen based direct reduction (H-DR) (80%), clean gas

No CCS3b) CleanGas

Biomass co-firing No CCS High quality EAF allowshigher shares for e.g. flat steel products

Steel substitution by biomass-based products; Higher material efficiency, Reinforced steel

3c) BioCycle(Bioeconomy & circular economy)

3d) Electric Electrolysis steel (80%) No CCS = 2) =1)

4a) Mix 80% H-DR, plasma, electrolysissteel (80%)

No CCS = 3c = 3c

4b) Mix 95% H-DR, plasma, electrolysissteel (100%)

No CCS = 3c = 3c

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• Bottom-up simulation• High technology detail• Country level• Policy instruments

3 scenar ios a re s imu la ted w i thbo t tom-up mode l FORECAST

Mitigation options REF TRANS-CCS TRANS-IPT

Energy efficiency

According to current policy

framework and historical trends.

Faster diffusion of incremental

process improvements (BAT & INNOV

≥TRL 5).

= TRANS-CCS + selected radical

process innovations

(INNOV ≥TRL 5)

Fuel switchFuel switching

driven by energy and CO2-prices

Financial support for

Fuel switching to biomass and PtH

= TRANS-CCS + Higher financial

support for biomass and PtH

CCS - CCS for major processes -

Recycling and re-use

Slow increase in recycling rates

based on historical

trends.

Faster increase in recycling (e.g.

steel, aluminium, paper).

= TRANS-CCS

Material efficiency and substitution

Based on historictrends.

Increase in material

efficiency & substitution.

= TRANS-CCS

Scenario definition Simulation

Energy-intensive Processes

Drivers: Production, value added, employment, end-user energy prices

Saving option dif fusion

Buildings stock model

Heating systems stock model

End-use energy balance

Saving options dif fusion

System ef f iciency

Steam generation stock model

Fuel sw itch

Results by sub-sector, energy carrier, temp. level, end-use, country

Space heating & cooling

Steam & hot w aterElectric motors& lighting

Furnaces

Macro

Material ef f iciency Circular economy

Calibration

Cross-cuttingBottom

-up

Regional analyses

Structural change

Carbon capture and storage

Hourly demand & demand response

Excess heat potentials

Drivers- GDP- Population- Energy prices- Temperature- Business cycle

Policy- Taxes- CO2-price- Standards- Grants- OPEX support

Technology & Behaviour

- Ef f iciency- Savings- CAPEX, OPEX- Learning- Emissions- Lifetime- Preferences

Input data

Structure- Energy balance- Emissions

balance- Technology

distribution

Results

Energy demand- Final energy- Delivered energy- Useful energy

GHG emissions- Energy-related- EU ETS- Process related

Costs- Investment- Policy cost- Energy spending

Indicators- Levelised costs

of process heat- Energy savings- Technology and

fuel mix - SEC by process- Technology

Market shares - CHP generation- Frozen ef f iciency- Heat and cold

temperatures

Process energy demand

Interfaces and add-ons

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Assumptions Market entry in 2030

Reaching saturation in 2050

Requires replacement of entire capital stock within only 20 years

Technologies need to be ready for fast market introduction by 2030

Scenar io TRANS- IPT requ i res fundamenta l change in p rocess techno log ies

0%

50%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

Cement

Conventional Zement Low Carbon cement 50Low carbon cement 70 Less carbon cement 30

0%20%40%60%80%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

(Primary) Steel

DRI RES H2 Conventional BOF

0%20%40%60%80%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

Ammonia & methanol

H2-based Conventional

0%20%40%60%80%

100%

2015 2030 2040 2050

Prod

uctio

cap

acity

Glass

Electric melting Conventional melting

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Industry sector: Industry in 2015

about 19 % of total GHG emissions

37% reduction from1990 to 2015 in industry sector

EU Low-Carbon Roadmap from 2011 requires emissionreduction of 83-87% by 2050 for all sectors

Indus t ry GHG emiss ions about 19% o f EU to ta l i n 2015

Source: EEA

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Comparison of selected industry decarbonisation studies for Germany

Compar ison : Re levance o f techno log ies var iesacross s tud ies fo r Germany

Scen

ario

GHG

redu

ction

Ener

gy ef

ficien

cy

Biom

ass

PtH

PtG

CCS

New

proc

esse

s

Circ

ular

econ

omy

Mater

ial ef

ficien

cy

& su

bstit

utio

n

BMUB KS95 -99%

UBA THGND -95%

BDI 95%Pfad -95%

BMWi Langfrist -84%

BMUB KS80 -75%

BDI 80%Pfad -65%

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Overv iew po l i cy assumpt ions

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Assumpt ions : B iomass cos t -po ten t ia l cu rve

0

2

4

6

8

10

12

14

16

0 200 400 600 800 1000

Biom

ass p

rice

[eur

os/G

J]

Biomass potential [TWh/a]

Today's biomass use

EU sustainable

domestic biomass for

industry

International biomass market (pellets)

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Assumpt ions : Energy car r ie r p r i ces EU28 average ( inc l . taxes and lev ies , exc l . EUAs)

-

50

100

150

200

250

Ene

rgy

pric

e [E

uro/

MW

h]

EU28 average Light fuel oil / naphtha

Synthetic methane

Hydrogen

Electricity

Heavy fuel oil

District heating

Biomass 3: international pellets

Natural gas

Biomass 2: domestic pellets

Coke

Biomass 1: today's use

Hard coal

Lignite / waste non-RES

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Assumpt ions : CO2 pr i ce

Scenario 1-Ref: EUA price according

to EU Reference Scenario 2016

Other scenarios Higher EUA price Same CO2-price for

non-ETS Scenario 4b Mix95 Price anticipation 10

years ahead

0

50

100

150

200

250

2005

2008

2011

2014

2017

2020

2023

2026

2029

2032

2035

2038

2041

2044

2047

2050

CO

2-pr

ice

[Eur

o/t C

O2-

equ]

1-Ref "All other scenarios"

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S team genera t ion cos ts inc luded in de ta i leds tock mode l

techno‐economic data considered for steam generation technologies includes CAPEX, OPEX, Efficiency (thermal and electric), lifetime

CAPEX is a function of technology, installed capacity thermal, country and year

Specific CAPEX for steam generation technologies in Germany as a function of installed capacity [Eiuro/kWth]

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I nves tment needs are accounted as „add i t i ona l “ compared to a re fe rence

Investments are accountedas additional investmentneeded for the innovative process compared to a reference process

We assume regular re-investment cycles and no„early replacement“

Additional investment needs by innovative process

Sector Process Reference process

CAPEX [euro/t product] compared to reference process2020 2030 2040 2050

Iron and steel

Plasma steel (H2)* BOF route 438 377 324 278

DR electrolysis BOF route 198 170 146 126

DR RES H2 + EAF* BOF route 0 0 0 0

Chemicals

Methanol H2* Methanol -14 -14 -14 -14

Ammonia H2* Ammonia -222 -222 -222 -222

Ethylene methanol-based*

Ethylene naphtha based

0 0 0 0

Ethylene ethanol-based

Ethylene naphtha based

0 0 0 0

Non-metallic minerals

Less-carbon cement -30%

Ordinary Portland Cement

20 17 15 13

Low-carbon cement -50% (recarbonating)

Ordinary Portland Cement

50 43 37 32

Low-carbon cement -70%

Ordinary Portland Cement

80 69 59 51

Low-carbon cement -95% (recycled concrete)

Ordinary Portland Cement

150 129 111 95

Clinker electric kiln Clinker conventional rotary kiln

50 43 37 32

Container glass electric furnace

Container glass gas furnace

129 111 95 82

Flat glass electric furnace

Flat glass gas furnace

129 111 95 82

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C lean gas p roduc t ion cos ts inc luded as energy car r ie r p r i ce

Clean gas production

Resulting energy carrier price

Hydrogen: 140-160 Euros/MWh

Synthetic methane: 220-240 Euros/MWh

Electrolysis

ElectrolysisMethanisation

Renewable Electricity:~100 Euros/MWh

CO2: 0 Euros/MWh

Assumptions

CAPEX electrolyser: 500-700 euros/kWel(Literature: 350-900)

Fullload hours: 4000

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I nves tment needs fo r CCS inc lude en t i re p rocess cha in

Capture costs are differentiated by process and differ according to CO2 concentration in flue gas, emission quantity, purity of CO2-stream, etc.

Assumptions are in line with a broad range given in the literature

The specific location and regional specificities of individual sites are not considered

Underlying assumption: Large-scale CO2 transport infrastructure available

Investment needs for CCS infrastructureProcess Sector Capture CAPEX [euro/t CO2 a]

Transport & storage [euro/ t CO2 a]

OPEX [% of CAPEX]

2030 2050 2030 2050

Ammonia

Chemicals

40 30 140 113 7%

Methanol 60 44 140 113 7%

Ethylene 180 133 140 113 10%

Integrated steelworks

Iron and steel

90 67 140 113 5%

Clinker

Non-metallic minerals

150 111 140 113 12%

Lime 150 111 140 113 5%

Container glass 400 296 140 113 7%

Flat glass 400 296 140 113 7%

Fibre glass 400 296 140 113 7%

Other glass 400 296 140 113 7%

Integrated paper mill

Pulp and paper

400 296 140 113 7%

Refinery basic

Refineries

200 148 140 113 10%

Refinery gasoline focused

200 148 140 113 10%

Refinery diesel focused

200 148 140 113 10%

Refinery flexible 200 148 140 113 10%


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