A step change towards decarbonising industry. The tools required for transition.

Heat, Industry and Power currently generate about 38% of New Zealand’s CO₂e emissions. The He Pou a Rangi, Climate Change Commission (CCC), Draft Advice published on 31 January 2021, proposes preliminary emissions budgets and direction of policy to achieve the targets agreed under the Zero Carbon Act through to 2035.

Heat, Industry and Power currently generate about 38% of New Zealand’s CO₂e emissions. The He Pou a Rangi, Climate Change Commission (CCC), Draft Advice published on 31 January 2021, proposes preliminary emissions budgets and direction of policy to achieve the targets agreed under the Zero Carbon Act through to 2035.

This think - piece discusses a number of initiatives Beca believes will be needed in Aotearoa to meet the magnitude of the climate change challenge when it comes to our future in industrial heat decarbonisation and waste utilisation.

We are strongly supportive of the CCC objectives and vision and are excited to work with industry and community stakeholders to achieve the emissions targets and forge strong pathways into a net zero carbon future. The CCC Draft Advice acts as a good starting point, and we see several additional areas of focus, which could help New Zealand to be carbon zero by 2050.

This Ignite article explores the Heat, Industry, and Power (HIP) recommendations described in Section 6.1.2 of the Draft Advice, and we share our insights in possible initiatives to decarbonise industry and the engineering, policy and collaboration needed to achieve it.

Biomass and Electrification – The opportunities and challenges

Demand reductions and energy efficiency are the first steps before considering a switch to new generation fuels. While these are critical steps in New Zealand’s pathway to a zero carbon future, this piece focuses on the options for fuel switching on the assumption that efficiency gains have already been made.

We agree with the Advice that biomass will be a key lever in decarbonising industry. It will be an important tool to enable short-term decarbonisation of assets that have not yet reached the end of their useful life. Biomass products such as wood chip, wood pellets, and harvest residues are a renewable and sustainable fuel source. However, there are several barriers that will need to be considered.

The Draft Advice focuses on the opportunity to use post-harvest residues for biomass. If all forestry residues were able to be captured, we estimate we could replace approximately 90% of current industrial coal[1,2,3]. However, 90% collection of harvest residues is often neither technically nor economically feasible in many locations due to difficult terrain and the remote locations of much of New Zealand’s forestry plantations. To improve collection rates of forestry residues, we would need improved policy to drive greater reuse of those forestry residues that are accessible, and investment in additional local processing of the harvest residues.

To replace all of New Zealand’s annual industrial coal use with biomass would require that approximately 10% of our productive exotic forestry land be diverted to the sole function of supplying biomass. Although this level of utilisation seems feasible on paper, there are significant additional considerations such as the geographic limitations of the forestry locations and distance to the end users. Competing land-use needs, including our timber export market, food production, biodiversity, and permanent carbon sinks, need to be balanced against the opportunity to use biomass to decarbonise industry. Whole of life impacts of biomass conversions will need to take into account any flow-on effects associated with transport to avoid counter-productive emissions outcomes.

Switching to biomass also introduces difficulties for end users that may discourage the uptake of decarbonising assets. Wood fired boilers require considerable storage and handling infrastructure, so space on industrial sites can be a limiting factor. The separation between fuel storage and products on hygienic sites further exacerbates space constraints. Urban zoning emissions limits also need to be considered.

In summary, we think there is significant opportunity within New Zealand to replace coal with biomass where it can be sourced locally. However, as the primary option for New Zealand introduces various challenges.

We concur with the Advice that electrification of process heat will also be a major contributor to the transition. Again, our experience has highlighted several challenges that will need to be overcome. Electrification is highlighted as playing a key role in achieving both the process heat and the transport emissions targets. This transition to electricity amounts to a significant increase in power generation requirements. Some alternative fuel sources for decarbonising industrial heat would therefore lessen the load on the power grids.

Further, the electrification of process heat can result in significant changes to associated infrastructure. For example, the transition from coal boilers to electric heat pumps for low to medium temperature process heat translates to a shift from using steam (from coal burners) to hot water (from heat pumps). This means changes to power supply, pipes and pumps, buildings and other industrial equipment, all of which have associated embodied carbon footprints and costs.

Enablers for Industrial Decarbonisation

Fuel Flexibility

We see some additional opportunities to strengthen the recommendations made in Section 6.1.2 of the Draft Advice. A strategy which allows greater flexibility in the fuel choice for decarbonisation should lead to a faster reduction in emissions. This will allow Industry to determine which fuels are most appropriate for their location and process requirements, as well as encourage full consideration of the downstream impacts of decarbonising assets.

More locally available fuels that could be considered on a case-by-case basis include:

• Grain stubble
• Tallow
• Dried biosolids from wastewater treatment plants
• Biogas from wastewater treatment plants, and plants digesting food and green waste
• Bio-methane from refined biogas
• Bio Liquified Petroleum Gas (LPG) from biodiesel production

We estimate that biogas production from relatively accessible sources around New Zealand, such as food waste and animal manure, could produce an additional 14 PJ of biogas. This is around 20% of industrial natural gas consumption[4] so could have a significant impact on emissions. This biogas can be upgraded and used directly as a renewable natural gas substitute or grid injected. Natural gas blended with bio-methane (produced by refining biogas) would increase renewable fuel use. For end users, this would be a capital-free decarbonisation option since the biomethane can be used with existing gas-fired assets. Countries such as Denmark, have approximately 20% of their gas grid made up of biomethane, with the goal to be 100% biomethane by 2035. The use of the existing gas grid reduces transport emissions and allows gas generation to be remote from the user and performed at the location of the source material. This could provide rural investment opportunities.  

Incentive Policy Timeframes

Policies that support the development of renewable fuels and which are flexible to the type of fuel, will be required to deliver investment in this area. Such policies will also need to provide long term operational cost support (not just initial capital funding) to accelerate the adoption of the infrastructure and industrial equipment required. This support, if structured correctly, could also potentially enable collaboration between industry partners to invest in joint energy infrastructure.

A further step in this direction is future planning of industrial areas. Strategic co-location of industry would support the idea of eco-parks and shared industrial energy ecosystems where waste heat from one company can be used to power another’s processes. Long-term commitment in policy incentives and planning are critical for these ideas to be feasible investment opportunities.

Waste

There are many advanced approaches being executed around the world, not only to avoid landfill waste, but also to support a more circular economy approach and make useful end products from waste. These products include biogas from digestion of source-segregated organic waste, as well as bio-fertilisers and compost produced from digestion by-products.

Bio-fertilisers are rich in the necessary compounds required for good plant growth, i.e., nitrogen and phosphorus. This encourages a circular recycling of these nutrients, as they are applied to the land to produce foods, then fed back through the digestion process to be recycled again and again. This reduces the dependence on increasingly scarce nutrients put into chemical fertilisers.

Conclusions

The recommendations of the CCC Draft Advice are welcomed, particularly given they provide a strong platform for national conversations on our pathway to achieve the 2050 zero-carbon goal. We concur that this goal is technically feasible with the existing technologies we have available.

We believe decarbonisation is possible, but the capital involved is significant and needs strong government policy support to be achieved. Electrification and biomass will be key elements of the transition but are unlikely to be the solution for everything.  

We see much greater potential in having policy that both supports innovative and flexible solutions, and allows for fuel flexibility so that the chosen solution is the best for the end user. Greater collaboration across industry and government could lead to other opportunities such as the creation of industrial ecoparks. This would put New Zealand in an even stronger position to meet our emission targets.

We are already working on exciting projects in this space, including a collaborative feasibility project on the opportunity for biogas in New Zealand and EECA Energy Transition Accelerator (ETA) projects for a number of industrial clients. We are pleased with the progress already made in New Zealand towards a zero carbon future and we are excited to continue to support the decarbonisation of Industry.

References:

1. Enviro Link, 2018. Best Practices for Reducing Harvest Residues and Mitigating Mobilisation of Harvest Residues in Steepland Plantation Forests.
2. MPI, 2016. Wood Availability Forecasts – New Zealand 2014 – 2050. Available forest as of April 2015.
3. MBIE, 2019. Annual Coal Supply, Transformation, and Consumption
4. MBIE, 2019. Gas Production and Consumption