Corporates, Electricity, and Renewables

An Analysis of Industrial Electricity Use and CO2 Emissions Across the Globe

Authors: Ali Hasanbeigi, Navdeep Bhadbhade, Cecilia Springer

By understanding the driving forces behind industrial electricity use and emissions, stakeholders can gain a clearer perspective on where the corporate sector is fueling global coal use through its electricity consumption and identify opportunities for actions and decarbonization. This study addresses the significant gap in understanding the landscape of global industrial electricity use, offering a data-driven foundation for more informed decisions in the race to achieve net-zero climate targets.

The assessment included countries within key geographical regions characterized by significant amounts of operational coal and where industrial electricity use is significant. The regions covered include Africa (South Africa, Morocco), Asia (China, Japan, The Republic of Korea, Taiwan), Southeast Asia (Indonesia, Vietnam, Thailand, Malaysia, Philippines), Europe (Germany, Italy, Poland, Turkey), South and Central Asia (India, Kazakhstan), North America (United States), Latin America (Brazil, Chile, Mexico) and Oceania (Australia). The 22 selected countries in this study represented 75% of global manufacturing electricity use and were responsible for 89% of global manufacturing electricity-related CO2 emissions. These countries, therefore, represent the highest emissions-cutting potential through corporates’ renewable energy procurement.

Some of the key findings of this study are:

1. Corporates in the industrial sectors are one of the main consumers of electricity in countries with significant operational coal-fired power generation capacity.

2. China, and therefore corporates operating directly or through their supply chains, is the largest manufacturing electricity consumer and CO2 emitter. Manufacturing electricity-related CO2 emissions in China in 2019 were equal to 2.5 gigatons (Gt CO2). This is higher than the total annual CO2 emissions of India in 2019 (2.3 Gt CO2), which is the 3rd largest CO2 emitting country in the world after China and the U.S.

3. Outside of China, the United States, India, Japan and South Korea have the largest manufacturing electricity use in the world (Figure ES1). The top five electricity-consuming countries were responsible for 67% of global manufacturing electricity usage and 73% of corresponding CO2 emissions.

2. Top 5 electricity-consuming industrial subsectors are: 1) iron and steel, 2) chemicals and petrochemicals, 3) machinery, electrical and electronic equipment, 4) non-ferrous metals such as aluminum and copper, and 5) non-metallic minerals such as cement and glass. These sectors account for approximately 72% of global manufacturing electricity use (Figure ES2).

5. Global manufacturing electricity demand will increase substantially by 2030. Especially countries in Southeast Asia will see more substantial growth in manufacturing electricity use. In these countries, corporate clean electricity procurement will be critical as companies cannot only rely on grid decarbonization spearheaded by local government.

The bigger picture is the urgent need to decarbonize the industrial sector, which in 2019 accounted for 38% of total final energy consumption. A crucial aspect of this decarbonization process is reducing electricity-related CO2 emissions. In addition, the electrification of industrial processes in the coming years will increase electricity demand and necessitates a parallel transition towards renewable electricity sources. We show how and where the industry sector is driving global fossil fuel use through their electricity use and highlight the potential for corporate renewable energy procurement to reduce CO2 emissions associated with electricity consumption.

We also highlight the varying electricity-consuming manufacturing subsectors across different countries, emphasizing the need for tailored policies and renewable electricity procurement strategies. The global electricity demand for the industry is expected to increase between 2019 and 2030, but by assuming zero-carbon power generation by 2050, the industrial electricity-related CO2 emissions are estimated to decrease by 2030 for most countries and manufacturing subsectors studied.

Therefore, it is crucial that electricity grid decarbonization takes place alongside the growth in electricity demand from the industry sector, with additional electricity demand met by renewable sources. Our analysis reveals that manufacturing electricity demand in most countries exceeds annual clean energy generation, emphasizing the urgent need for expanding renewable energy capacity and promoting corporate renewable electricity procurement.

Our findings emphasize the need for additional renewable electricity generation resources and the role of policies, such as renewable portfolio standards (RPS), in driving the transition towards greener electricity sources. We also explore the role of corporate renewable electricity procurement in driving change within the industry sector. There are a variety of models for corporate renewable energy procurement, depending on the market and size of the buyer. Through power purchase agreements (PPAs) and onsite or offsite renewable electricity generation, companies can reduce their carbon footprint, save money, and improve their reputation. However, companies in electricity-intensive industries, such as chemical and petrochemical, iron and steel, non-ferrous metals, and cement, are lagging behind in adopting renewable electricity procurement strategies.

By delving into the complexities of global industrial electricity use and emissions, this study aims to guide the transition towards a low-carbon industry and power sector, identifying opportunities for corporations to drive change by using renewable electricity and contributing to the global effort to reach net-zero climate targets.

To read the full report and see complete results and analysis of this new study, download the full report from the link above.

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