Industrial energy use — including for heat in industrial processes — is a significant source of carbon emissions in Europe, accounting for 20% of the region’s greenhouse gas emissions. To meet climate and renewable energy goals, industrial decarbonisation needs to accelerate. 

Reducing emissions from process heat is possible by using increasingly clean electricity instead of the fossil fuels that currently predominate. Process heating accounts for two-thirds of industrial energy use. The potential for electrification is vast in activities such as food processing, pulp and papermaking, and the production of chemicals, steel and cement. Existing technologies could electrify 60% of process heating today, with the potential for 90% with technologies expected to reach the market by 2035. 

Yet only 3% of process heating demand was electrified as of 2020. This report examines the barriers standing in the way of electrification and how policymakers can comprehensively address them by designing a coordinated policy mix.  

The benefits of electrification extend well beyond reducing carbon emissions. Electrification also supports the European clean tech manufacturing industry; reduces Europe’s dependence on fossil fuel imports; improves efficiency; and reduces other pollution. Industrial electrification solutions are varied and versatile, able to offer better productivity, process control, safety and flexibility than their fossil fuel counterparts.  

Policymakers seeking to accelerate electrification have a number of tools and policy instruments available to them. In this report we organise them into five groups, each addressing a different need or type of barrier:

• Define the course and set boundaries through regulation, targets and standards.
• Improve economic conditions through energy and carbon pricing, fiscal incentives and targeted support.
• Meet infrastructure needs through grid planning and optimisation and providing access to value streams from flexibility markets.
• Close the knowledge gap by providing information and expanding supply chain integration.
• Tackle technological barriers by supporting research and development.

Decision-makers can design a combination of specific measures that best fits their context and goals, drawing on the policy tools in these five groups and examples of electrification policy in action. 

To support the European Commission’s focus on decarbonising industry and improving economic competitiveness, the report also offers a 10-point action plan for putting in place policy measures that address electrification needs and barriers.