Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options

The report examines the potential for direct electrification to decarbonize China's industrial process heating, which accounts for nearly three-quarters of the manufacturing sector's CO2 emissions. It focuses on industrial heat pumps for low-temperature needs (up to 165 °C) and thermal batteries for high-temperature needs (up to 1,700 °C). A techno-economic analysis reveals that while coal-fired boilers currently have the lowest levelized cost, industrial heat pumps become the cheapest option for low-temperature heat when 2030 carbon pricing is included. The report identifies significant barriers, including the high cost of electricity relative to coal and limited equipment availability, and recommends policies such as equipment rebates, carbon pricing expansion, and the optimization of Green Electricity Certificates to accelerate the transition.

• China's manufacturing sector is a major source of emissions, with 61% of the country's CO2 emissions originating here, and nearly three-quarters of those emissions are linked to industrial process heating.
• Industrial heat pumps are highly efficient for low-temperature heat (up to 165 °C), with those raising temperatures by 40 to 60 °C typically achieving efficiencies of 300-400%. They are the only heating technology capable of exceeding 100% efficiency.
• Thermal batteries can provide heat up to 1,700 °C, making them suitable for over two-thirds of the process heating needs in China's manufacturing sector. They offer a cost advantage over lithium-ion batteries, with estimated large-scale costs of $27/kWh compared to $150/kWh.
• For temperatures under 100 °C, industrial heat pumps have a levelized cost of $38/MWhth (¥260/MWhth). While coal-fired boilers are currently cheapest, heat pumps become the lowest-cost option when incorporating an estimated 2030 carbon cost of ¥130 per tonne CO2.
• Industrial thermal batteries have a levelized cost of $46/MWhth (¥314/MWhth) and are competitive with natural gas-fired technologies.
• Electrification significantly reduces pollutants; heat pumps reduce five pollutants (CO2, NOx, SOx, PM10, and PM2.5) relative to coal, while thermal batteries reduce three (SOx, PM10, and PM2.5).
• A primary barrier to electrification is the price gap: coal costs approximately 134 yuan/MWh, while electricity for industrial buyers is significantly higher at 635 yuan/MWh.
• The report suggests several policy levers to overcome barriers, including equipment rebates, retooling grants, expanding inter-provincial electricity trading, and aligning the Green Electricity Certificate (GEC) system with international standards to avoid double-counting.

APA

Sawe, N., Lu, H., Rissman, J., Tian, Z., & Zhou, N. (2024). Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Clean-Industry-in-China-Comparison-of-Electrified-Heat-Technologies-Barriers-and-Policy-Options-202433.pdf

Chicago

Sawe, Nik, Hongyou Lu, Jeffrey Rissman, Zhiyu Tian, and Nan Zhou. Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options. Energy Innovation, 2024. https://energyinnovation.org/wp-content/uploads/Clean-Industry-in-China-Comparison-of-Electrified-Heat-Technologies-Barriers-and-Policy-Options-202433.pdf.

Wikipedia

{{cite report |last1=Sawe |first1=Nik |last2=Lu |first2=Hongyou |last3=Rissman |first3=Jeffrey |last4=Tian |first4=Zhiyu |last5=Zhou |first5=Nan |title=Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options |publisher=Energy Innovation |date=May 2024 |url=https://energyinnovation.org/wp-content/uploads/Clean-Industry-in-China-Comparison-of-Electrified-Heat-Technologies-Barriers-and-Policy-Options-202433.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sawe2024clean, author = {Sawe, Nik and Lu, Hongyou and Rissman, Jeffrey and Tian, Zhiyu and Zhou, Nan}, title = {{Clean Industry in China: A Techno-Economic Comparison of Electrified Heat Technologies, Barriers, and Policy Options}}, institution = {Energy Innovation}, year = {2024}, month = may, url = {https://energyinnovation.org/wp-content/uploads/Clean-Industry-in-China-Comparison-of-Electrified-Heat-Technologies-Barriers-and-Policy-Options-202433.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }