Interaction between defossilisation of basic industries and relocation : Scenario-based explorative and normative transition pathways to electrification for European basic industries and specific clusters

Sammanfattning: The steel and chemical production industries are the largest industrial emitters of greenhouse gases in the European Union, together accounting for half of the EU’s industrial greenhouse gas (GHG) emissions. A promising strategy for achieving deep GHG emissions reductions is the electrification of these two industries, which would depend on the rapid expansion of renewable electricity supply. Such electrification can be direct, where electrical appliances replace fossil fuel powered ones, or indirect, using renewable hydrogen produced from water by electricity. Both methods of electrification represent a systemic shift for these industrial systems and require a major wave of investment into new process technologies, as well as access to renewable electricity and green hydrogen. Old industrial structures could become stranded as a consequence of shifting energy and feedstock supply in this way.The thesis focuses geographically on the major region for EU steel and chemical production: the area between the two North Sea ports of Antwerp and Rotterdam in the west and the Rhine-Ruhr area in the east. It studies the technical and economic feasibility of electrification in the steel and chemical production industries (specifically petrochemicals), followed by an analysis of the impact on locational factors and possible spatial reconfigurations of the production system. The analysis builds on scenario methodology with extensive stakeholder engagement and uses different quantitative bottom-up models developed during several projects. To accelerate and facilitate the transformation of the two focal industries in the region, the thesis identifies strategic options for policy makers, steel and petrochemical companies, as well as for infrastructure providers such as port authorities and network operators.The results obtained demonstrate the feasibility of electrification and its potential to play a crucial role in the defossilised production of steel and petrochemicals, even in a region with a relatively low renewable electricity potential (such as the one studied). The transformation requires a hydrogen infrastructure for steel and petrochemical clusters and increased circularity, especially in the petrochemical industry. Some production steps in the value chain, such as iron making or chemical feedstock production, will have strong incentives to relocate (either partially or fully). However, other factors, such as the benefits of existing assets and the advantages of vertical integration in existing clusters, may discourage the total relocation of entire production chains.