Industrial path to decarbonise
The World Economic Forum (WEF) opens in Davos, Switzerland next week, 20 January, 2025 for week-long discussions focused around this year’s theme of “Collaboration for the Intelligent Age”. The focus of the dialogue will be on rebuilding trust, reimagining growth, safeguarding the planet and fostering industries in the intelligent age.
The press release from the WEF on this year’s event puts climate, nature and energy on the agenda to build on key initiatives from the United Nations to scale the deployment of renewable energy and the decarbonisation of energy for industry with respect to the environment and nature. The Global Risks’ Report puts extreme weather events second on the list of high priorities for the world. These are some of the energy picks for the week. Take a look at the programme.
Industrial Clusters as Energy Pioneers
January 22, 2025: 11:30–12:15CET
Open Forum: Powering Progress (electricity, energy access)
January 22, 2025: 12:30–13:45CET
All Hands on Deck for the Energy Transition
January 23, 2025: 11:30–12:15CET
Ursula von der Leyen, President of the European Commission; European Commission, Fatih Birol, Executive Director, International Energy Agency; Morten Wierod, Chief Executive Officer, ABB; Mirek Dušek, Managing Director, World Economic Forum; Gurdeep Singh Chairman and Managing Director, NTPC; Lars Rebien Sorensen, Chairman of the Board of Directors, Novo Nordisk Foundation.
Hardware for Good: Scaling Clean Tech (energy)
January 24, 202510:15–11:00CET
Read whether your company can benefit from the key WEF global initiatives, including:
The Transitioning Industrial Clusters Initiative focusing on economic growth that targets CO2 emissions in industrial clusters.
The First Movers Coalition, which is a global coalition of companies leveraging their purchasing power to decarbonize the world's heavy-emitting sectors. Special targets are companies focusing on carbon dioxide removal, cement, concrete and steel.
The United Nations released a press release in the last quarter of 2024 saying that it is still technically possible to meet the 2030 climate goals “only with a G20-led massive global mobilisation to cut all greenhouse gas emissions, starting today”.
“Continuation of current policies will lead to a catastrophic temperature rise of up to 3.1°C”
European initiatives under Fit for 55, European Emissions Trading tightening
Separately, Europe’s Fit for 55 initiative aims to reduce greenhouse gas emission by 55% by 2030 which has incentives at national levels across Europe. There are many initiatives that your industry or building can benefit from, including the REPowerEU Plan addressing affordable, secure and sustainable energy for Europe.
Additionally, the Recovery and Resilience Facility helps industries decarbonise production processes which are subject to the EU Emissions Trading System.
In April 2024, the Commission approved a €4 billion German State aid scheme partially funded under Recovery and Resilience Facility.
Germany has “committed to ensure that the aid delivers overall CO2 reductions and that it does not merely displace the emissions from one sector to another with the aim of increasing the share of renewable and low carbon electricity in the national electricity mix. “The projects that will benefit from the aid will be selected through an open competitive bidding process and will be ranked on the basis two criteria: (i) the lowest aid amount requested per ton of carbon dioxide (CO2) emissions avoided (i.e. the primary criterion), and (ii) the speed at which the projects can achieve significant CO2 emission reductions.”
Be aware that there is a planned tightening of the European Emissions Trading System (ETS2) due to come into force in 2027 that will be applied to more industrial sectors, including factories under 20 megawatts.
If passed, this will subject smaller factories and plants to tougher polluting penalties, making the economic and environmental case for high-temperature heat pumps (HTHPs) more attractive. There are incentives for smaller industries as well – read HERE.
Right policy, signals to stimulate green investments
The carbon footprint of factory manufacturing can be reduced with the right policy and funding support. Industrial heat pump OEMs face challenges in delivering fast paybacks that industry expects when integrating heat pumps into manufacturing environments. Serious investment and support for industrial heat pump scale-up and roll-out is needed in Europe, which lags compared to the level of funds that are available in the USA.
Increasingly, disruptive and innovative SMEs will join forces to scale their technologies to deliver energy efficiency gains and more uptime opportunities for industry that should address faster payback times.
Speed of industrial heat pump integration in Europe backed by initiatives
The industrial heat pump market is being stimulated by tougher energy and environmental policies, including a phase-out of fossil fuel boilers and more pilot grants and support for industry to transition away from oil and gas.
The European Heat Pump Association published a document on the Subsidies for industrial heat pumps in Europe. Find out what your country is doing HERE.
The decarbonisation of energy for buildings and district heating is key to solving the climate crisis. Read which countries are banning fossil fuel boilers HERE.
New York has an ambitious plan to phase-out fossil fuel boilers which is part of the Empire Technology Prize. Enerin is in the final. More can be read HERE.
As the WEF in Davos kicks-off next week, with opportunities to join via livestream, we should remind ourselves of some key initiatives, statements and challenges that directly affect the deployment of heat pumps.
Expensive electricity biggest barrier to heat pump roll-out
In many countries electricity is more expensive than gas which can be a barrier to heat pump (HP) adoption because HPs need a portion of electricity to generate more units of thermal energy.
Scandinavia and Finland traditionally have a high market penetration of HPs and HTHPs because the difference between the price of electricity and gas is less, making electrification a viable and attractive option. Enerin is based in Norway where heat pumps have a high market penetration.
The European Heat Pump Association has a MAP showing the price of electricity versus gas in European countries.
Jan Rosenow calls for rebalancing taxes, levies on electricity to tackle ‘spark gap’
Director of European Programmes, Regulatory Assistance Project, Jan Rosenow. et al said in the December 2024 briefing paper for the World Economic Forum titled Industrial Electrification: Strategies and Policies for Europe that it is imperative that governments maintain an equitable electricity-to-gas price ratio.
“Rebalancing taxes and levies on electricity will tackle the ‘spark gap’ or electricity-gas ratio that will bring down operating costs after electrification”. The point is that “high and volatile electricity costs represent a primary barrier for industries electrifying their processes,” Rosenow said.
Mario Draghi report on power market reform, restructuring power trading
In September 2024, the former Italian Prime Minister and European Central Bank chief, Mario Draghi, released his controversial European competitiveness report: The future of European Competitiveness where he called for an electricity market reform focusing on the way that power is traded.
He said that the EU’s energy market had been designed when fossil fuels were the most important part of the energy mix. “It’s not so any longer,” he said, noting that the price of gas still set the electricity price 60% of the time in 2022 although it only made up 20% of the [fuel] generation mix.
“It’s a market that’s really dominated by vested interests [and] financial rents…all this boils down to the fact that we are not able to transfer the benefits of less costly energy produced by renewables to our consumers,” Euronews reported Draghi as saying.
Electricity reform will increase European competitiveness – Goldman Sachs Utilities Head
Alberto Gandolfi, Head of the European Utilities for Goldman Sachs Research, writes about Draghi’s competitiveness analysis, saying that European manufacturers pay more than double for electricity than their counterparts pay in the United States making the region less competitive.
A key element in Draghi’s proposal is the creation of a liquid market for power purchase agreements (PPAs) which would allow companies to contract directly with renewable energy producers.
“If implemented, we believe that it would lower the cost of capital for renewable companies, whilst supporting faster top-line growth in power grids and renewables.”
The trade association Eurelectric criticized the Draghi report, saying that regulating the electricity market would amount to a market intervention and discourage investors that are essential for global electrification measures.
Addressing fossil, renewables subsidies
Europe should address its $56 billion in fossil fuel subsidies and continue to reduce reliance on cheap, unsustainable gas from unstable regions and autocratic states. Read HERE.
A December 2024 report from the European Union says that while fossil fuel subsidies are decreasing, they provide support to strategic industries and sectors related to the security of food and energy supply – HERE.
Renewables are also subsidized, although many believe this is necessary to redress the balance. Subsidies have a big influence on energy prices and the fuel of choice that is used. Read WHY.
Industrial heat pumps are key to electrification, energy efficiency gains and CO2 reductions
Industrial heat pumps are reaching a good maturity and suitability for industry. Enerin's steam and water HoegTemp heat pumps are best operating across a range of temperatures. The HoegTemp is flexible to varying, fluctuating conditions and follows demand for water and steam and thermal oil delivery up to 250°C — from any source temperature, as low as -30°C. This is unique.
Enerin addressed this topic in a previous blog where thermal energy storage was discussed with a focus on maximising profits and saving on cooling towers and water resources. More can be read HERE.
Increasingly heat pump companies are entering into Energy-as-a-Service agreements which can be attractive for industry to test the technologies. The Original Equipment Manufacturers of heat pumps, often in association with energy providers, offer the machine and the related service to the industrial client without the company having to make an upfront capital investment. Customers usually pay a subscription-based service fee to the heat pump company or they pay when savings are achieved, although there are many ways to structure these agreements.
Enerin CEO, Arne Høeg. Photos: Zuzana Havlinova.