- New paper from Danfoss provides a clear guide for industrial companies to strengthen their competitive advantage through decarbonization, electrification, and energy efficiency.
- Only one-third of the EU energy mix comes from electricity - electrification of energy demand in industry critical for driving competitiveness.
- Optimizing motor efficiency in the EU alone could save €9.5-10.7 billion in electricity costs annually while avoiding the equivalent annual CO2 emissions of up to two million European citizens.
Europe is falling behind the US and other countries on several key competitiveness parameters including productivity, energy prices, innovation, and investments. A new Danfoss Impact paper asserts that “competitive decarbonization” holds the key to unlocking European competitiveness, enabling industries to simultaneously reduce their environmental footprint and enhance their competitive edge.
The paper outlines multiple already existing products and solutions which can be applied immediately across European industry to limit energy waste, promote electrification, and boost competitiveness, especially in energy-intensive industries.
Electric motors power many essential industrial technologies such as fans, pumps, compressors, and conveyor belts, and account for more than two-thirds of industrial electricity consumption. The optimization of motor efficiency in the EU alone could save €9.5-10.7 billion in electricity costs annually while avoiding 12.5-14.1 million tons of CO2-emissions – equivalent to the annual footprint of up to two million European citizens.
Meanwhile in the EU, only around one third of the energy mix comes from electricity, yet it is necessary for industries to electrify wherever possible or risk piling on to an energy grid which is already at maximum capacity. The paper calls for the Electrification Action Plan to also include clear targets for demand side electrification.
I remain a stubborn optimist when it comes to Europe’s future, but we need to reestablish the growth mindset of the past. Mario Draghi’s report on EU competitiveness has crucially identified many areas in which Europe can improve including our elevating energy bills as a case for a massive overhaul of how Europe does business. Lowering energy consumption, cutting emissions and driving down the energy bills through energy efficient and cost-competitive electrification solutions could very well be European industry’s greatest growth opportunity.
“Our Danfoss Impact paper takes this a step further by outlining a clear guide for immediately taking action to harvest the lowest hanging fruits in industry to limit energy waste, promote greater rates of electrification and boost competitiveness, especially in energy-intensive industries. Rather than dismissing decarbonization in the pursuit for greater productivity, our research shows that decarbonizing industries is critical for making them more resilient and increasing economic competitiveness,” added Fausing.
The Danfoss Impact paper reveals that by adopting energy efficiency and decarbonization measures, manufacturing industries could save significantly on energy bills while increasing the gross value added. The cost-efficient measures can both prepare the industry for deep electrification and free up vital funds needed for investments in R&D and innovation – two key areas where Europe is falling behind.
Since 1990, EU productivity has grown at a slower pace than in the USA, while industrial emissions have increased by over 70%. This trend, coupled with heavier regulations and the impact of volatile energy prices, highlights the need for a paradigm shift in how Europe approaches industrial decarbonization.
Mario Draghi’s report into EU Competitiveness took an important step in spotlighting the “existential challenge” faced by Europe. In fact, EU companies are facing electricity prices that are two to three times those in America, while natural gas prices are four to five times higher.
This impacts industrial production costs, and thereby also competitiveness, and emphasizes the need to lower energy consumption while maintaining and even increasing, the industrial output.
Industrial actors can strengthen their competitive advantage through decarbonization by increasing energy efficiency, limiting energy waste, preparing operations for an electric future powered by renewables, and meeting new climate regulations early to attract investment and remove risk.
The EU is also falling behind on electrification. However, estimates show that existing technology can electrify 78% of industrial energy use, with the possibility of reaching 99% electrification with technology already existing or in development.
Some of the most energy-intensive processes are related to heat generation, mostly generated by combustion of fossil fuels. As such, electrifying industrial heat can play a major role in reducing this outsized energy demand, while at the same time lowering companies’ carbon footprints and energy costs.
Heat pumps can be a key lever in decarbonizing process heat in industry. Delivering industrial process heat in the EU with heat pumps can lead to reductions of 146 million tons of CO2 emissions, equivalent to 22% of Germany’s net CO2 emissions in 2021.
“When we think about boosting competitiveness, we also need to look at some of the most sensible and logical solutions for industry which save companies energy and money,” says Fausing. “A recent pilot project we ran at our production facilities in Slovenia showed that 80% of the machines could be switched off when not in use. Importantly this had absolutely no impact on our productivity, but it did lead to a 30% reduction in energy consumption. That equates to an annual financial saving of between €3- 5 million for Danfoss if the initiative is fully rolled out to all production facilities, which we can instead redirect to our R&D operations. This is an unbelievably simple but effective approach, but it does require a change in attitude and mindset. All industrial companies can and should look to similar decarbonization solutions as a way to boost competitiveness.”
Business leaders and policymakers will be convening on Sønderborg, Denmark from October 28-29 for the Powering European Industry event jointly hosted by Danish Industry, Danfoss, the International Energy Agency and BusinessEurope.
The new Danfoss Impact paper, “Competitive decarbonization: Powering the industries of tomorrow,” provides a clear guide for companies to strengthen their competitive advantage through decarbonization and energy efficiency.
Quick guide to industrial decarbonization:
- Save energy
- Optimizing motor efficiency in the EU alone could save €9.5-10.7 billion in electricity costs annually.
- Simply switching off machines at Danfoss’ Slovenia production facilities has resulted in a 30% energy saving, equating to an annual savings of €3-5 million if the initiative is fully rolled out to all production facilities.
- Financial savings can be redirected to R&D operations or digitalization projects.
- Electrify
- Estimates show that existing technology can electrify 78% of industrial energy use, with the possibility of reaching 99% electrification with technology already in development.
- Heat pumps can be a key lever in decarbonizing industries
- Delivering industrial process heat in the EU with heat pumps can lead to reductions of 146 million tons of CO2 emissions, equivalent to 22% of Germany’s net CO2 emissions in 2021.
- Integrate
- Sectors and processes must be more closely integrated to make the best use of the incredible amounts of wasted by-products generated every day by industries, such as excess heat.
- By 2030, up to 53% of the world’s energy input will be wasted as excess heat, making it the world’s largest untapped energy source.
