Low Carbon Thermal Energy Roadmap for Textile Industry

Authors: Ali Hasanbeigi, Cecilia Springer, Dennis Wei

This report, commissioned by the Apparel Impact Institute (Aii) and authored by Global Efficiency Intelligence, focuses on strategies to transition textile plants in five key textile-producing countries (China, India, Vietnam, Bangladesh, and Indonesia) to low-carbon thermal energy by shifting to alternative fuels and electrification technologies. The report analyzes electrification with electric boilers and industrial heat pumps, and the effects of switching to the alternative fuels of biomass and natural gas. Results are presented for steam and thermal oil heating, which account for 50-60% and 30-40% of fuel use in a typical textile wet processing plant, respectively.

To develop a roadmap for textile plants to transition to low-carbon thermal energy, extensive baseline data were collected on textile wet-processing facilities in each country, including boiler systems, energy consumption, and process-specific heat requirements. The study used detailed techno-economic modeling to compare the performance and costs of alternative fuels and electrification technologies against traditional fossil fuel-based boilers, primarily coal-fired. Importantly, the analysis was done for a single typical textile wet-processing plant in each country, not for transitioning the entire industry in that country to lower carbon alternatives in the coming years. Projections were made for energy savings, emissions reductions, and energy costs.

For electrification technologies, we assumed grid electricity would be paired with directly procured renewable electricity (RE) (e.g. Power Purchase Agreements, onsite generation), which is a growing trend in the textile industry. We analyzed two renewable energy procurement pathways for 2030, 2035, and 2040 in each country, differing by the share of procured RE relative to grid electricity: Baseline RE Procurement and Ambitious RE Procurement. In addition, for steam producing technologies, the capital costs and projected annual operating costs were used to estimate an overall levelized cost of heat for steam generation that allows more direct comparison of lifetime costs for each technology.

The Baseline Grid Plus RE Procurement pathway assumes each country will achieve their stated net zero target (where applicable), and that a typical textile facility will be able to supplement their grid electricity supply with a baseline and increasing share of procured renewable energy, with the assumed share of RE reflecting the state of the corporate RE procurement market in each country, with China, India, and Vietnam having greater RE supply and regulatory mechanisms to enable corporate RE procurement relative to Indonesia and Bangladesh. The Ambitious Grid Plus RE Procurement pathway assumes a more ambitious integration of renewable energy into the grid and availability of RE for corporate procurement, beyond these countries’ current transition plans and trajectories. For China, India, and Vietnam, which have rapidly expanding RE supply and policy support for direct procurement, we assume that a typical facility pursuing an ambitious low-carbon thermal energy transition could procure 100% of its electricity from renewable sources by 2030.

While the Baseline Grid Plus RE Procurement Scenario is based on trends we see today, it is not a given. A lot of policy, infrastructural and financial pinch points exist to realize the baseline scenario. However, we are confident that our research demonstrates this scenario is likely to happen. In order to reach the Ambitious Scenario the countries studied would have to accelerate their energy transition. When estimating the feasibility and pace of shifts to electrified technologies, the projected availability of RE (which delivers electricity with zero emissions) and its cost are the key determining factors, and these factors differ significantly across the five countries evaluated. Carbon pricing plays an important role in projected energy prices, and hence in driving the transition, raising the price for coal over time and making the cost of electrification technologies more competitive. Important differences also derive from the “starting point” of current costs for fuels as well as baseline grid emission factors for each country.

Switching to alternative fuels can result in emissions and cost savings in the near term. For switching from coal to natural gas, the direct emissions factor of natural gas is lower. However, there could be an overall increase in annual GHG emissions relative to coal if upstream leakage of methane, a potent greenhouse gas, is not mitigated (Figure 1). Additionally, natural gas has logistical challenges that limit uptake as well as higher costs and price volatility. For switching to biomass-fired boilers, if sustainable biomass can be procured (e.g. agricultural residues), it is possible to significantly reduce net CO2 emissions and lower energy costs in the near-term.

Apparel brands and textile manufacturers should refer to existing industry frameworks such as the Institute for Sustainable Communities Guidelines. While China has relatively abundant sources of biomass, countries like India and Vietnam are already leveraging this fuel source. Indonesia may have an abundance of biomass, but the availability of sustainable biomass is very limited due to deforestation risk. Bangladesh has the least availability of biomass for textile manufacturing. Actual feasibility for an individual textile facility depends on local availability of sustainable biomass. In the longer term, supply of sustainable biomass will be limited and prices will increase, especially if demand increases based on widespread adoption in the textile industry. For this reason, we conclude that electrification, discussed below, is the most viable low-carbon solution for the longer term.

Textile manufacturers and apparel brands must monitor biomass supply and seek to transition to electrification while monitoring and promoting RE availability as biomass supply becomes more expensive and sustainable biomass becomes limited. Our analysis shows that alternative fuels (biomass and natural gas) can deliver near term emissions savings under certain conditions, however they are unlikely to play a role in the longer term decarbonization journey to net zero.

Electrified technologies deliver significant efficiency improvements and lower overall energy use. When paired with renewable energy, these are the only long term, net zero compatible solutions. Our findings show that emissions reductions are achieved for all electrification technologies, pathways, and countries by 2035. In particular, heat pumps, due to their high levels of efficiency, deliver emissions and cost savings in every geography by 2030, even in the Baseline Grid Plus RE Procurement pathway (Figure 3).

Electric steam boilers can reduce CO2 emissions from 2030 onwards in China, India, and Vietnam relative to coal-fired boilers when grid electricity is paired with an equal share of procured RE. Without a higher share of directly procured RE, Indonesia’s very high grid emissions factor could lead to electric boilers actually increasing CO2 emissions in 2030, while in Bangladesh, electrification does not offer near-term emissions benefits because the currently used fuel for boilers is natural gas, which has a lower direct emissions factor. Results for electric hot oil boilers are similar, but slightly lower in magnitude. Additionally, as electric boilers have less efficiency gains than heat pumps, they do not deliver cost savings in China, India, and Vietnam until 2035 and not until 2040 for Bangladesh and Indonesia.

Across all countries, electrification with steam generating heat pumps leads to greater efficiency gains and energy savings than from conversion to electric steam or hot oil boilers. In a typical textile wet-processing facility, we estimate that steam-generating heat pumps can reduce energy by 48 GWh per year relative to conventional steam boilers, compared to energy savings of 18 GWh per year for electric steam boilers.

In order to compare the lifetime cost of low-carbon thermal energy transition, we estimated levelized cost of heating (LCOH) for steam production. The LCOH for the steam technologies in China is presented in Figure 4, and results for the other countries are described as follows. While electric boilers raise energy costs in 2030 in the studied countries relative to conventional coal-fired boilers, their LCOH (which takes into account energy and other costs over the full lifetime of the technology) is lower than coal boilers in China and India due to the projected trajectories of electricity prices relative to coal. In addition, carbon pricing could come into effect and significantly increase costs for fossil fuel-fired boilers. In all countries, heat pumps have lower LCOH for steam production than coal, natural gas, and electric boilers, driven by their high efficiency, even when taking into account their high capital costs or the potential absence of a carbon price (Figure 4). Biomass boilers are expected to have lower LCOH compared to fossil fuel-fired and electric boilers, however, if biomass prices rise more than projected and/or facilities with biomass boilers are subject to a carbon price (shown in gray in Figure 4), biomass boilers may have a higher LCOH than electrified technologies.

A major driver of these results is the electricity pathways developed in this study, which assume increasing shares of corporate RE procurement in the studied countries over time. Corporate RE procurement is a growing global trend, with supply of RE increasing at the same time as apparel brands and manufacturers in other industries seek to procure low-cost and low emissions electricity. Corporate RE procurement is also necessary for electrification to achieve decarbonization. Without RE procurement, electrifying industrial processes in countries reliant on fossil fuel-based grid electricity (i.e. all countries in this study) simply shifts emissions to power generation rather than reducing them. Corporate RE procurement mechanisms, like Power Purchase Agreements (PPAs), green electricity tariffs, and onsite generation can provide companies with stable, lower-cost energy while reducing CO2 emissions.

Each country’s context informed country-specific pathway development for the quantitative analysis. China and India, which have greater RE supply and regulatory mechanisms in place to grow that supply, and Vietnam, which has just recently put new policies in place supporting RE development and procurement, show promising potential for CO2 reductions via electrification in the coming decade, whereas Bangladesh and Indonesia are less promising for corporate RE procurement until 2040. Thus, while electrified technologies provide the clearest and most likely path to sector decarbonization, this analysis demonstrates the importance of supporting factors needed to make it possible and the role for alternative fuels along the way.

Based on the potential of electrification technologies to lower emissions and energy costs, this report also provides step-by-step implementation guidelines for electrification at a textile plant as well as information on financing mechanisms in each country. We propose four steps for implementation of electrification, many of which can be informed by the content in this roadmap:

• Step 1: Gathering data on existing electrical systems and fuel-fired equipment, assessing energy use, and determining the facility’s potential for electrification.

• Step 2: Planning for increased electrical loads by analyzing current infrastructure and determining if upgrades are necessary, and continuous reduction of thermal energy need through best practices

• Step 3: Developing feasibility assessments and evaluating cost, technical viability, and environmental impacts of electrification technologies

• Step 4: Implementing the selected electrification technologies by securing funds, obtaining permits, conducting procurement, training staff, and installing the new systems

Financing mechanisms are essential for enabling the transition to low-carbon thermal technologies in textile plants. Key financing options include traditional bank debt, green bonds, sustainability-linked loans, grants, and equity investments (Apparel Impact Institute 2024). Development banks such as the Asian Development Bank (ADB), World Bank and Asian Infrastructure Investment Bank (AIIB) and international climate funds can offer concessional loans and grants in countries like India, Vietnam, Bangladesh, and Indonesia. The role of apparel brands and coalitions (e.g. the Future Supplier Initiative and the Aii Fashion Climate Fund) is critical in guiding suppliers towards electrification as a long-term strategy. Brands can also make longer-term commitments that reduce the risks of investment and improve the business case.

Our roadmap synthesizes the results from our analysis to present recommendations for stakeholders in each country over the next 15 years in order to drive low-carbon thermal energy transition in textile plants. The roadmap recommends a focus on electrification paired with RE procurement as a key solution, and sustainable biomass when sources can be traced and verified and air pollution can be managed. We also provide recommendations to create the enabling environment so that our scenarios can be realized. Much work needs to be done on the policy and utility level to enable a transition to electrification. The summary below presents generalized recommendations that apply to textile plants in all the studied countries.

Apparel Brands: From 2025 to 2030, apparel brands should actively fund pilot electrification projects and engage suppliers in reducing their thermal load while adopting renewable energy, especially in China and India where RE procurement is available now. In countries with emerging RE procurement frameworks, brands should advocate for increased RE supply, integration, and mechanisms for corporate procurement. Sustainable biomass may be a transition solution in the near-term, but brands must do their own research on the sustainability and viability of the biomass supply or support the establishment of traceability mechanisms to avoid risks such as contributing to deforestation. Ultimately, facilities should prepare for electrification, using this roadmap and other resources to develop electrification plans, and promoting the potential economic and environmental benefits of electrification. By 2030-2035, brands should work to scale successful pilots across their supply chains, supporting larger adoption of low-carbon technologies and renewable energy and engaging in policy advocacy. By 2040, they should help manufacturers fully transition to electric systems.

Textile Manufacturers: In the pilot stage of 2025-2030, textile manufacturers should implement pilot electrification projects and initiate workforce training, focusing on heat pumps and thermal load-reducing innovations, while also exploring options for RE procurement. During this initial stage, manufacturers should also create long-term investment plans, integrating decarbonization and business strategies. From 2030-2035, they should expand these efforts across multiple regions, integrating renewable energy sources and refining workforce skills. By 2040, the goal is to achieve complete electrification of heating systems powered by renewable energy, potentially participating in utility programs that can optimize energy use (such as demand response).

Based on these findings and recommendations, we developed a simplified Decision Tree to guide textile facilities in choosing the best low-carbon thermal heating option (Figure 5). The first step is to assess the feasibility of corporate RE procurement by 2030, as it is necessary for delivering the decarbonization potential of electrification technologies. If feasible, facilities should evaluate electrification options, with electricity-to-fuel price ratios, the grid emissions factor, and upfront capital availability driving the choice between electric boilers and heat pumps. If RE procurement is not feasible, heat pumps can still deliver emissions reductions even with a highly carbon-intensive grid electricity due to their efficiency. When RE procurement is not available and the grid emissions factor is extremely high or there are CAPEX barriers to heat pumps, sustainable biomass may be considered, provided there is a reliable and verifiable supply and pollution control technologies are in place. For facilities unable to meet these criteria, advocating for supportive RE policies may be necessary. This decision tree is a high-level guide and should be complemented by a facility-specific evaluation, considering factors like boiler age, efficiency, space, and process requirements. In all scenarios, the facility’s ability to reduce thermal energy load requirements from production can greatly increase the business case of low carbon pathways.

There is significant opportunity for low-carbon thermal energy transition in textile plants in China, India, Vietnam, Bangladesh, and Indonesia. Electrification technologies and sustainable biomass have potential for reducing emissions and driving cost-effective energy use in the textile industry when coupled with corporate renewable energy procurement, or, for sustainable biomass, rigorous verification of sustainable sourcing as well as air pollution controls. While the roadmap is limited to these five countries studied, the same logic and frameworks can be used to evaluate options for low carbon thermal energy in other textile producing countries. The analysis in this report highlights that electrification can be both environmentally and economically viable in the near term. However, the transition requires strong support for textile plants from apparel brands, policymakers, financial institutions, and utilities. By creating favorable policies, offering financial incentives, and modernizing infrastructure, these stakeholders can accelerate the textile industry’s low-carbon transformation.

To read the full report and see complete country-specific results and analysis for China, India, Vietnam, Indonesia, and Bangladesh, download the full report from the link above.

This report is the second in a series of two reports on low-carbon thermal energy for the textile industry. The first report focused on assessment of low-carbon thermal energy technologies and sources, while the second report (this report) conducts a quantitative assessment and develops a roadmap for adopting these low-carbon technologies and energy sources in a typical wet-processing textile plant in five major textile-producing countries: China, India, Vietnam, Bangladesh, and Indonesia. Taken together, these reports present detailed information on alternatives to fossil fuels, especially coal, in the global textile industry and lay out specific options and a roadmap for paths to achieve net zero emissions.

Interested in information and decarbonization studies on the global textile and apparel industry? Check out our list of textile industry publications and tools on the Textile Sustainability Hub.