Industry: from hard-to-abate to ready-to-electrify
How far can industry run on electricity?Much further and faster than the 'hard-to-abate' label suggests.
Every time the gas price spikes, a part of European industry goes quiet. The 2022 gas crisis forced factory closures and shifted production across the continent, and many energy-intensive sectors never fully recovered. More recently, tensions around the Strait of Hormuz were a reminder of how exposed industry still is to fuels it does not control. The usual response is to find more gas. There is a better one, and a new analysis I worked on with Cassandra Etter-Wenzel suggests it is far more achievable than most people assume.
Industrial electrification potential much higher than commonly assumed
The report is called High Voltage, and the question behind it is simple: How much of industry energy demand could actually run on electricity? Industry accounts for 29% of global CO2 emissions, most of it from burning fossil fuels to make heat. For years that has been filed under “hard to abate”, a label that too often becomes an excuse to wait. A lot of analysis has already been produced on industry and potential energy pathways. So rather than build another model, we synthesised the best evidence that already exists: a meta-review of bottom-up engineering studies, and a systematic analysis of 1,600 global mitigation scenarios that report how much of industrial energy comes from electricity.
Here is the bright spot. Today, electricity meets only about a fifth of industry’s final energy. Across the full set of scenarios, the median rises to 35% by 2050. But that average hides the more interesting story. In the scenarios built around strong climate ambition, fast power-sector decarbonisation and supportive industrial policy, electrification reaches a median of 51% by 2050, with the upper tail going as high as 85%. Look further out, and by 2100 the high-electrification pathways cluster around 68 to 70%, with some reaching near-complete electrification.
Policy matters
The number that matters most is not any single percentage. It is what explains the gap between the low and high pathways. The spread does not reflect a technical ceiling. It reflects enabling conditions. The scenarios at the top consistently combine early, large-scale infrastructure investment with clean, affordable power and policy that points in the same direction for long enough to matter. In other words, the difference between an industry stuck at a third electrified and one approaching the high tail is not physics. It is choices we make this decade.
That reframing is the whole point. Electrification is a structural fossil fuel phase-out and decarbonisation lever, not a marginal one. Swapping an industrial gas boiler for a heat pump cuts emissions on day one, and then keeps cutting them automatically as the grid gets cleaner. Industrial heat pumps, electric boilers, electro-thermal storage and resistance heating can already replace large shares of low and medium-temperature heat. These are not prototypes. The barrier is rarely whether the technology works. It is usually that running electricity costs more than burning gas, because of how we price and tax the two.
None of this means it is easy. Steel, cement and chemicals need very high temperatures and process changes that are genuinely harder, although a suite of technologies such as plasma torches and induction heating is becoming available also for very high temperatures. Industrial assets are long-lived and capital-intensive, and firms are understandably wary of committing to higher upfront costs when future energy prices and carbon policy look uncertain. In sectors like pulp and paper or refining, electrifying also means losing the on-site power generation that currently offsets operating costs. These are real constraints. But they are reasons to design policy carefully, not reasons to wait.
The report sets out a short list of immediate priorities. Make electricity the safer, more stable option by removing the levies and charges that fall disproportionately on power. Scale the technologies that already work, using tools such as auctions, contracts for difference, operating grants or clean heat premiums to bridge the price gap. Fast-track grid connections and permitting, because a project that cannot get a grid connection is not a project. De-risk first movers with faster depreciation, tax credits and concessional finance. And use public procurement and industrial clusters to anchor demand so early projects can scale.
Then there are the structural priorities for the longer haul: making clean electricity genuinely abundant and affordable, aligning industrial strategy with electrification rather than against it, and focusing scarce innovation effort where electrification is hardest, without slowing down everywhere it is already viable. Harder to electrify sectors deserve targeted demonstration support. Low and medium-temperature heat, which is most of the demand, deserves to be rolled out today.
Treating industrial electrification as a strategic opportunity rather than an add on is also what I told the 27 EU energy ministers in my intervention in the European Council in October last year - you can watch the recording below.
The durable answer to fossil fuel volatility is to depend less on internationally traded fuels and more on electricity that can be generated at home from wind and sun. Every factory that electrifies is a factory less exposed to the next price shock. That is the framing I think gets industrial electrification out of the “too hard” box and into the “why are we waiting” one.
What about the economics?
But what does this cost? Some of this I have looked at directly. In recent work with colleagues at the Technical University of Denmark, published in Cell Reports Sustainability, we compared the lifetime cost of heat across the main clean options for low and medium-temperature industrial heat: high-temperature heat pumps, electric boilers, hydrogen boilers and biomass boilers. The chart below shows the levelised cost of heat for each in the EU using average price data under different electricity prices and operating hours.
Two things stand out. First, high-temperature heat pumps come out cheapest of all the clean options, and pairing them with thermal energy storage cuts the cost of heat by up to a further 15% by letting them run when electricity is cheap. Second, hydrogen boilers are not close. Even under optimistic assumptions, including free and unlimited hydrogen storage, they remain far more expensive than the alternatives, and even a 100 €/tonne carbon price does not make fossil gas more expensive than hydrogen.
The important part is the gas comparison. As the grey bands in the chart show, heat pumps are not yet universally cheaper than burning gas, but they close in fast, and at lower electricity prices the best configurations get there. That gap is not about the technology. It is about how we price electricity against gas, and about the upfront cost of the kit. Which is exactly why targeted support, for thermal storage, heat network connections and first movers, does so much work here.
The world’s first industrial heat electrification auction
Last year the EU launched the world’s first industrial heat electrification auction. The EU's Innovation Fund Heat Auction is the bloc's first dedicated instrument for industrial heat electrification. In May it was announced that the auction is set to run again: Following the €1 billion pilot launched in December 2025, which attracted 85 applications worth nearly €10 billion in bids and ultimately awarded around €400 million to 65 projects across ten countries, the Commission has confirmed a second round will take place in 2026 with another €1 billion budget. The signal matters as much as the money. In my intervention at the European Council (see video above) I urged the Commission to make the auction recurring rather than one-off. It is great to see Brussels committed to continuing the scheme - a recognition that long-lived industrial assets need investment predictability, not a single competitive window. The pilot already covered the full temperature range, with a dedicated high-temperature basket above 400°C and eligible technologies spanning heat pumps, induction, resistance heating, and plasma torches. Making it a standing instrument turns a proof-of-concept into the embryo of the future Industrial Decarbonisation Bank, and tells the supply chain that electrified process heat is now core EU industrial policy rather than a niche climate experiment.
The thing I will be watching is the 2020s themselves. The decisions made now on grids, retrofits and which equipment gets replaced when it wears out will largely determine whether industry can reach the high pathways later in the century. The technology is ready. The potential is bigger than most people realise. The question is whether policy keeps up.