Time to Cool Off: Decarbonizing Industrial Heat
Different industrial processes require different temperature ranges. Around 75% of iron and steel production and 62% of cement and lime manufacturing require temperatures above 1000°C, while roughly 45% of heat demand in chemicals falls between 500–1000°C. In contrast, lower-temperature needs — such as space heating and process water — can already be met by solutions like waste-heat recovery, industrial heat pumps, and thermal energy storage, with ongoing innovation aimed at extending these technologies to higher-temperature applications. Adapted from Orennia Insights.
Using IPCC and GCAM data, Energy Innovation projected future “greenhouse gas emissions at stake” in 2050, assuming current policies remain in place. The resulting estimates overlap because different technologies may reduce the same emissions pool.
Industrial heat is one of the quiet giants of the climate crisis. It’s essential to making the world’s materials — and responsible for an enormous share of the world’s emissions. Every time we produce steel, cement, chemicals, or textiles, we rely on heat so intense that fossil fuels have long seemed like the most practical option. The result: more than 20% of global energy consumption every year. Decarbonizing this heat is difficult, expensive, and constrained by decades-old infrastructure. It’s also entirely possible. Not only that — it has the potential to be one of the highest-leverage opportunities we have to cut global emissions at scale.
The Path We’re On
Industrial heat is warming our planet.
Industrial heat is the energy that factories use to make the world’s materials. Just like we use heat to cook food at home, industry relies on heat to melt, boil, dry, cure, and chemically transform raw inputs — but at a vastly larger scale and far higher temperatures. Producing steel, cement, chemicals, food, and textiles requires heat at temperatures that fossil fuels have historically been best positioned to supply affordably and at scale.
The result is a massive — and often overlooked — climate problem. Roughly two-thirds of all industrial energy is used to generate heat, and nearly a quarter of the world’s fossil fuels are burned for industrial purposes alone.
For decades, fossil fuels have dominated industrial heat not because they are uniquely capable, but because they are cheap, energy-dense, and deeply integrated into industrial systems. Combustion-based equipment can deliver high temperatures continuously, transform materials inside furnaces and kilns, and feed waste heat into other parts of a facility. Over time, entire plants have been designed around these characteristics, creating tightly coupled, multi-stage processes optimized for burning coal, oil, or natural gas.
What’s often misunderstood is that electrifying industrial heat is not a technical impossibility. In fact, electricity can already provide heat across the full range of temperatures required by industry — from low-temperature process heat to extreme temperatures well above 1,700°C. High-temperature electric heating is not hypothetical or experimental; it is already used commercially in specific industrial applications where precise control and ultra-high temperatures are essential.
The real barrier isn’t physics. It’s economics.
On an energy basis, fossil fuels remain extraordinarily inexpensive. Coal and natural gas often cost just $1-3 per gigajoule, while grid electricity is typically several times more expensive. Even when electrified heat technologies are technically proven — and even when the equipment itself is inexpensive — higher energy costs can erode margins and make these options unattractive to industrial users.
This cost gap shapes everything about the transition. Electrified heat works best where electricity brings unique advantages — like higher achievable temperatures, finer control, more uniform heat delivery, faster response times, and no combustion byproducts. But where those benefits aren’t necessary, it struggles to compete. That’s why electrification alone isn’t enough: scaling solutions means either radically improving efficiency or gaining access to much cheaper electricity — for instance, by taking advantage of times during the day when electricity is particularly cheap.
Industry already knows how to generate clean heat at virtually any temperature, but the barriers to doing so at scale are considerable. Solving these challenges is difficult — but given the sheer scale of emissions at stake, it represents one of the highest-leverage climate opportunities of our time.
Innovation Imperatives
Expand cost-competitive clean heat to higher temperatures
Industrial heat pumps can produce multiple units of heat from each unit of electricity, which makes them one of the few clean heat technologies capable of delivering meaningful emissions reductions while also lowering operating costs. Today, they are already effective for low-temperature industrial processes, but their impact is constrained as the temperature lift between the heat source and the target temperature grows, reducing efficiency. This imperative focuses on expanding the range of industrial applications where heat pumps remain both technically viable and economically competitive — particularly in the critical 100–200°C range, which accounts for a significant share of industrial heat demand. While thermodynamic limits make large temperature lifts inherently less efficient, innovations such as multi-stage heat pumps, compression-assisted systems, and improved system design could help extend cost-effective performance into higher temperature ranges. Advancing what industrial heat pumps are capable of, along with continued improvements in system efficiency, would unlock one of the fastest and most cost-effective pathways to decarbonizing industrial heat at scale.
Enable ultra-low-cost, continuous clean industrial heat
Thermal batteries offer a powerful pathway to reduce the cost of electrified industrial heat by decoupling when electricity is generated from when heat is used. By storing heat produced from ultra-low-cost or surplus electricity — including periods of high renewable output or negative pricing — thermal batteries allow industrial facilities to access cheap energy while still meeting continuous, high-temperature heat demand. As a form of long-duration energy storage, thermal batteries also help enable a more efficient, reliable grid by absorbing excess generation that would otherwise be curtailed, improving asset utilization and supporting higher shares of variable renewables. Thermal batteries comprise a broad range of technologies, typically grouped into three main types: sensible, latent, and thermochemical storage. Together, they can deliver heat across a wide range of temperatures. This imperative focuses on developing scalable thermal storage systems that can integrate seamlessly into industrial processes. While the core technologies are rapidly maturing, scaling deployment will also require reforms to grid access and electricity tariffs so industrial heat systems can benefit from flexible electricity pricing, energy trading, and ancillary service markets. Once these barriers are addressed, thermal batteries could make clean industrial heat economically viable even in regions with otherwise expensive grid electricity.
Expand access to underground heat for industrial use almost anywhere
Traditional geothermal energy has been limited to regions where naturally-occurring hot water and permeable rock are close to the surface, and has primarily been used for electricity generation rather than direct industrial heat. Advances in drilling and subsurface engineering (originally commercialized for the oil and gas industry) are beginning to unlock geothermal resources in a far broader range of geographies. By enabling deeper, more precise, and more cost-effective wells, these technologies could make it possible to tap into Earth’s natural heat nearly anywhere. This imperative focuses on scaling these capabilities to deliver reliable, high-temperature heat directly to industrial processes. If successful, enhanced geothermal could provide a continuous, low-emissions alternative to fossil fuels for some of industry’s most energy-intensive applications.
Moonshots
Deploy small modular reactors for manufacturing processes
Small modular reactors (SMRs) offer a potential long-term solution for decarbonizing industrial heat. Unlike traditional nuclear plants, SMRs are compact, factory-built systems designed to deliver high-temperature, reliable heat directly to industrial facilities. In theory, they could provide a steady, on-site, carbon-free energy source capable of meeting the intense thermal demands of sectors like steel, cement, and chemicals — without the emissions associated with fossil fuels. Significant challenges remain, including regulatory hurdles, high upfront costs, public perception, and the need to prove safety and economic competitiveness at scale. If these obstacles can be overcome, SMRs could redefine how industries source their most difficult-to-decarbonize heat.
A New Way Forward
Higher temperatures, lower emissions
Decarbonizing industrial heat will hinge not on a single breakthrough, but on a small set of approaches that can clear industry’s unusually high bar for cost, reliability, and integration. While many technologies can generate clean heat in theory, only a narrow subset have the potential to deliver it at the temperatures, scales, and economics required by real-world industrial processes. The imperatives below focus on solutions that directly attack the core barriers — closing the cost gap with fossil fuels, delivering firm heat aligned with continuous operations, and fitting into capital-intensive systems built to last for decades — while the moonshot explores a longer-term pathway that could fundamentally reshape how industry sources its most difficult-to-decarbonize heat.
The most viable solutions will:
Cost is the primary barrier to decarbonizing industrial heat. Today, coal and natural gas remain extraordinarily cheap — and average prices for electricity and hydrogen are significantly higher. Even when clean heat technologies are technically proven, higher operating costs are often enough to halt adoption entirely. Solutions that cannot close this cost gap — either through efficiency, access to ultra-low-cost electricity, flexible operation that takes advantage of low-price power, or system-level innovation — will struggle to scale without sustained policy support.
Industrial heat spans a wide range of temperature needs, from low-temperature process heat to extreme conditions exceeding 1,700°C. While electricity can already deliver heat across this entire range, not all clean heat solutions are suited to every temperature band. Viable approaches must reliably meet the specific thermal requirements of the processes they aim to replace without compromising performance, quality, or throughput.
Heat is not a generic input. In many industrial settings, heat is delivered through direct flame contact, radiant surfaces, pressurized steam, or tightly controlled thermal gradients inside furnaces, kilns, and reactors. Fossil-fueled systems often provide both heat and chemical interaction, and waste heat is frequently reused across multiple stages of a process. Clean heat solutions must therefore integrate into existing process architectures, or be codeveloped with new architectures, to deliver heat in forms that industrial equipment can actually use — not just reach the right temperature on paper.
Industrial heat systems are deeply embedded in facilities with lifespans of 20 to 50 years or more. Retrofitting or replacing this infrastructure is capital-intensive, slow, and operationally risky. The most viable solutions will either integrate with existing equipment or offer clear pathways for incremental adoption, rather than requiring wholesale redesign of industrial plants. While infrastructure lock-in is not the primary barrier to adoption, it significantly shapes how and where new heat technologies can realistically be deployed.
Industrial heat demand is often continuous, time-sensitive, or difficult to shift. Many industrial processes cannot tolerate interruptions, variability, or long ramp times. Clean heat solutions must therefore provide reliable, on-demand heat at the scale and cadence required by industrial operations. Approaches that rely on intermittent energy sources or complex supply chains must demonstrate how availability and reliability are maintained without imposing additional operational risk.
