Identifying the social good co-benefits of electrifying process heat

This report was produced by the Ministry for the Environment as an action under the Roadmap to Transition to a Low Emission Future (the Roadmap). 1 The Ministry for the Environment and Fonterra partnered on the Roadmap in November 2017. The Roadmap outlines actions to work through barriers preventing large industrial users of fossil fuels for process heat, such as Fonterra, transitioning to a low emissions, renewable energy future in a cost effective manner.

Process heat is heat used mainly in the industrial sector for manufacturing products but also the commercial sectors, for example, in space heating. Process heat accounts for approximately nine per cent of New Zealand’s gross greenhouse gas emissions – 60 per cent of process heat is supplied using fossil fuels, mainly coal and gas.

To transition to a low emissions economy, our energy use needs to be more efficient and to move away from relying on fossil fuels. To our advantage, New Zealand has a predominately renewables-based electricity system. While more can be done here, our biggest opportunities for further emissions reduction in energy lie in two areas – transport and process heat.

This report highlights the benefits from switching industrial heat plant and public sector space heating from coal to electricity that cannot be readily captured by the plant owner in New Zealand. Benefits that lie outside of market transactions, known as positive externalities are not currently adequately priced.

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