PwC study: cost-effective decarbonisation of industry mainly through CCS, hydrogen and hybrid solutions

Our industry contributes about 12% to the Dutch GDP and provides employment for hundreds of thousands of people. At the same time, the sector is facing a massive challenge: the ambition is to be climate-neutral by 2050, while companies today already face grid congestion, a hydrogen market that is still developing and strong international competition. It is important for industry to be retained in the Netherlands, as this strengthens our economy and resilience. At the same time, our industry must decarbonise to contribute to the climate targets.

PwC mapped out the majority of industrial CO₂ emissions and investigated the most cost-effective decarbonisation route for each process. Government support for certain technologies was deliberately ignored, to be able to compare the actual cost price of technologies. This way, Gasunie is hoping to contribute to a transparent debate on decarbonisation of the industrial sector.

Making our industry climate-neutral requires a reduction of about 44 megatonnes (Mt) of CO₂. Three routes will make a big difference over the coming fifteen years:

• Carbon capture and storage (CCS) will cover 21 Mt CO₂ per year, making it the most important route by far. About 18 Mt of this will come from low-carbon hydrogen, also called blue hydrogen.
• Decarbonisation of steel production: 9 Mton CO₂ per year.
• Use of hybrid boilers that run on steam during cheaper hours and otherwise on hydrogen or biomethane: about 6 Mt CO₂ per year.

Biomethane (4 Mt) and direct electrification, such as heat pumps, provide further contributions. Biomethane is mainly suitable for smaller companies that produce lower emissions. For sectors with the most concentrated emissions, CCS is the only feasible and cost-effective route in the short term.

The results show that decarbonisation requires a broad mix of energy sources. Electricity and sustainable gases as well as carbon capture and storage are required to decarbonise our industry.

The study also shows that decarbonisation is often more expensive than the current way of working. This causes many companies to postpone investments. Making decarbonisation more attractive and feasible requires additional measures. Examples are limiting investment risks for the construction of hydrogen and CO₂ infrastructure, support for blue hydrogen (through the SDE++ subsidy for instance), and upscaling renewable electricity and biomethane production.