The industry sector had the highest uptake of renewable energy among demand sectors, as it protects itself from fluctuating fossil fuel prices amidst the energy crisis.
PARIS – In 2022, energy-intensive industries were among those hit hardest by the energy crisis. Some industries were forced to cut production or relocate where energy prices are more affordable or more stable. These conditions favoured the uptake of renewable energy, which stood out as a resilient, reliable, stable and affordable alternative. At the same time, industries were able to find energy solutions in corporate power purchase agreements (PPAs).
The global renewable energy network REN21 launched its annual Renewables Global Status Report (GSR) Collection for 2023, with the release of four new modules exploring trends and opportunities for renewable energy deployment in buildings, industry, transport and agriculture across the world. Findings from the report show positive renewable energy trends in industry.
Industry had the highest share of renewables in total final energy consumption (TFEC) in 2020 among demand sectors, at nearly 17 per cent. Modern biomass represented 8.2 per cent of the TFEC of industries and renewable electricity represented 8.5 per cent. Pulp & paper and food & tobacco have the highest shares of modern renewables among all industry sub-sectors.
Additionally, corporate PPAs witnessed an uptick because of the energy crisis.
“Industries were looking to hedge themselves from energy prices and price fluctuations. In 2022, corporate PPAs witnessed a 21 per cent yearly growth in Europe. Many companies from different sub-sectors are increasingly looking for PPAs to procure their energy. German steel makers are increasingly looking at PPAs and switching to electric furnaces. In the chemical sector, more companies especially in Europe are also signing corporate PPAs,” said Jad Baba from REN21.
In developing countries and for industries located in remote areas, such as mining, the need for secure, reliable and affordable energy is propelling the growth of renewables, while also benefitting the industry and communities.
“Steel and cement companies are investing in wind and solar power plants from Argentina to Egypt and India. Mining companies have developed decentralised renewable energy projects in Australia, Madagascar and Mali that provide reliable and affordable energy for both mine sites and local communities,” said Baba.
Although there is some optimism about the rise of renewable energy, industries are still responsible for a quarter of global carbon emissions. Despite a slight decrease in the use of fossil fuels from 87 per cent in 2010 to 83 per cent in 2020, the industrial sector continues to heavily rely on them. However, the increasing use of renewable electricity (which grew by 80% in the past decade), and the electrification of industrial heat provide a reason for optimism.
Governments have an important role to play in this context, by implementing regulatory policies to curb fossil fuel use.
“Only nine countries have mandates for renewables in the industrial sector, and most of the policies are financial incentives that support renewables in the industrial sector. We also see some mixed signals from governments concerning renewables and, at the same time, increasing the support for fossil fuel subsidies. In 2022 alone, fossil fuel subsidies rose over one trillion dollars, that’s an 85 per cent increase compared to 2021. Additionally, governments are looking to new oil and gas exploration, and building energy terminals to replace Russian gas,” said Baba.
“There are those who want to slow down the renewable energy-momentum. Russia is a typical example of a country with an enormous, vested interest in the export of conventional fuels and no plan B. Now they’re in a very hostile mode towards other countries in the world,” said Tomas Kåberger, Director of the Energy Area of Advance at the Chalmers University of Technology in Göteborg.
However, integrated policies that bridge energy and industrial policies while promoting renewables, such as the US Inflation Reduction Act and Europe’s REPowerEU, signal progress.
“Industry needs reliability. The renewables uptake in industry was slow because of the lack of confidence in the supply side of installations. But renewables can be cost-competitive and reliable,” said Tareq Emtairah, Director of the Department of Energy at UNIDO.
“Traditionally maybe grids have been reliable, but for example, I come from Lebanon, and there, grids are not the most reliable entity. So, when we go to industries to convince them to switch, this is the argument we’re using — if you want reliability and predictability, only renewables can provide that,” Baba added.
About REN21 and the GSR 2023 Collection
REN21 is the only global community of renewable energy actors from science, academia, governments, non-governmental organisations, and industry across all renewable energy sectors. Our community is at the heart of our data and reporting activities. All of our knowledge activities, including the GSR 2023 Demand Modules follow a unique reporting process that has allowed REN21 to be globally recognised as a neutral data and knowledge broker. Since its first release in 2005, REN21 has worked with thousands of contributors to put the spotlight on ongoing developments and emerging trends that shape the future of renewable energy. Producing this report each year is a collaborative effort of hundreds of experts and volunteers contributing data, reviewing chapters and co-authoring the report.