Together with Agora Industry and IDDRI, we analysed how electrification will reshape cost competitiveness across five sectors by 2035 in the EU 🇪🇺, the United States 🇺🇸 and China 🇨🇳: primary aluminium, primary steel, paper, steam production for chemicals and battery cell production.
Key findings: 2/x
🔌 Today, electricity accounts for only up to 5% of production costs in sectors that have not yet electrified their processes. This stands in stark contrast to fossil fuels which make up 30–80% of production costs in many energy intensive sectors.
🔌 Once electrified, power will directly and indirectly account for 60 to 100 percent of total energy use in most sectors. Electricity costs will represent 10 to 90 percent of production expenses, depending on the energy intensity of the process. 3/x
🔌 A coherent policy mix is essential. Power price support alone is not enough. Combining effective carbon pricing #EU ETS, #CBAM with de risking tools such as #CfDs and long term #PPAs is needed.
⚡ Electrification is key to Europe’s industrial future. Avoiding fragmented national approaches and aligning energy, industrial and climate policy at EU level will be critical to making it come to fruition. 4/x
The paper “Powering Europe’s industry: competitiveness, electrification and the role of electricity prices” is based on a technical analysis by Compass Lexecon.
To read & download: https://www.agora-energiewende.org/news-events/making-european-industry-more-competitive-through-electrification 5/5
Agora Energiewende