Deep-Decarbonization of the Industrial Sector through Electrification in France : Analysis of Current Status, Technologies and Policies

Sammanfattning: The increasing scientific awareness around man’s responsibility towards global warming has led to political decisions and actions, in order to try to curb the phenomenon of climate change. As a pioneer in tackling greenhouse gases emissions, Europe is committed to achieving carbon neutrality by 2050, with emission reduction targets of -55% by 2030, and Member States have had to make plans to fulfil this goal. The industry sector represents a huge part of the global GHG emissions: in France alone, it stands for 18% of yearly emissions in 2019. Electrification is highlighted in carbon neutrality strategies as a major lever for decarbonizing industry, especially thermal energy demand, but is very little adopted by industry. No study has been carried out on the means to be implemented (policies, financial incentives, subsidies, etc.) to encourage the adoption of electrification solutions to decarbonize the industry. This Master Thesis focuses on the decarbonization of industrial heat via electrification, given the significant role of thermal energy demand in industrial emissions and the potential of electric technologies to enable deep decarbonization. The aim of the research is to investigate the barriers and constraints in the French and EU policy framework affecting the decarbonization of industry through electrification in order to allow both policymakers and sector leaders to gain insight into technology and policy strategies in governing a long-term transition for the decarbonization of industry via electrification in France, and to help bridge the gap between the French ambition and the current industrial answer. A comprehensive study, based on existing academic and scientific literature, EU policies, framework and regulations pertinent to the decarbonization of industry has been performed. It has been combined with a systematic academic literature review to identify the barriers and drivers to the decarbonization of industry via electrification, but also the potential policy options to drive electrification. The study evaluates the current framework based on a SWOT ((Strength, Weakness, and Opportunities & Weakness) analysis, which includes a PEST (Political, Economic, Social, Technological) macroeconomic factor assessment and an expert elicitation. Results show that economic factors hinder most the deployment of electrification in the industry and must be tackled first: electric solutions suffer most from their lack of competitivity compared to fossil fuels, with high upfront costs but above all higher operating costs and thus not only need investment support but also operation support to compensate for the spread between electricity and gas. More broadly, international competitiveness is an issue and measures such as a carbon border adjustment mechanism are needed. Uncertainties about boundary conditions, and very much related to this, the lack of long-term contracts, are important policy disincentives and revising the electricity market design would be a major a way to drive electrification. Given the lifespan of industrial assets, it is necessary to renew the assets that need it with electric solutions now, otherwise there is a risk of a technological lock-in of fossil fuels by 2050. Policymakers should thus take action as soon as possible to foster the deployment of electric solutions and accelerate the transition towards a decarbonized industry.