Why electrification is Europe's no-regret move – even with the current power mix
Electrification often raises questions about the power mix, yet it already cuts emissions across Europe, especially through heat pumps. Future support schemes should drive flexibility and faster renewables deployment to maximise climate, cost and energy security benefits.
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Marco Giuli
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Émeline Spire
Electrifying industrial process heat is one of the most powerful tools Europe has at its disposal to cut dependence on foreign fossil fuels and decarbonise its economy. The required technologies are largely mature and commercially available - particularly for low- and medium-temperature applications. The window to act is now: industrial heating assets typically operate for several decades, meaning that investment decisions taken over coming years will lock in emissions trajectories well beyond 2050.
How does the carbon intensity of the power mix affect actual outcomes? The question has gained momentum as the EU and national governments design support schemes for industrial electrification – including for the forthcoming Industrial Decarbonisation Bank. We explore this question in this commentary, drawing on evidence provided by Fraunhofer ISI.
To limit the risk that electrification could increase overall emissions, pilot programmes such as the Innovation Fund have made support conditional; projects that cannot operate flexibly or use storage are only partially eligible. This approach is intended to discourage operation during hours when electricity generation is still heavily reliant on fossil fuels.
Our analysis supports this approach. However, it also suggests that it should be applied in a more targeted manner. The risk that electrifying process heat increases emissions over the asset lifetime is limited to a small number of countries and specific technologies, and only in the short term. In contrast, electrification is in most cases a clear no-regret option, including for higher-temperature applications. Indirect emissions should therefore be considered only a minor factor when providing strong and immediate support for electrification when industrial assets come up for reinvestment.
Highly efficient heat pumps reduce emissions even with carbon-intensive power mixes
Electrification reduces emissions whenever it significantly improves efficiency, most notably through heat pumps. By converting one unit of electricity into two to four units of useful heat, heat pumps provide a decisive advantage over fossil-based systems.
The efficiency advantage of heat pumps is so striking that they cut emissions even in countries with very carbon-intensive electricity mixes, such as Poland and Estonia. For technologies such as electric boilers or furnaces, emission reductions depend on the local power mix. In four countries - Estonia, Poland, Cyprus and Czechia - electricity generation is currently still so carbon-intensive, that electrifying certain industrial heating processes in the short term can emit more than using fossil gas.
Electrification can already reduce industrial emissions in almost all EU Member States
Europe’s rapidly decarbonising power system minimises indirect emissions risks
Cases where the electrification of industrial process heat emits more than using fossil gas are increasingly the exception rather than the rule - and that exception is shrinking fast. Across the countries studied emissions from electricity generation are falling rapidly, driven primarily by the growth in renewable energy deployment. As a result, even the few remaining countries with electricity systems that rely heavily on fossil fuels will be able to run electric boilers with the same climate impact as gas boilers before 2040. When upstream emissions from fossil fuels - particularly liquefied natural gas (LNG) - are included, this will be the case already in the early-to-mid-2030s.
Against this backdrop, shifting from fossil gas to electricity in the short term delivers emission reductions across the asset lifetime in almost all Member States. Only three countries – Estonia, Poland, and Cyprus – see higher emissions. In Czechia, this would only be the case if upstream emissions from gas are overlooked.
As renewables expand, industrial electrification cuts emissions even in carbon-intensive power systems
Flexibility can cut both emissions and costs
For countries with emission-intensive power system, the short-term solution for electrifying higher temperatures is flexibility. A key insight from the analysis is the strong correlation between electricity prices and CO₂ intensity. Periods of low electricity prices tend to coincide with high renewable generation and, therefore, lower emissions.
This creates a clear opportunity: flexible electrified systems (e.g., via hybridisation or storage) can shift operations towards hours when electricity is both cheap and clean.
A closer look at the use of electric boilers on an hourly basis reveals varying national contexts, but also a path towards practical solutions. In France, electric boilers consistently reduce emissions compared to gas boilers, thanks to a cleaner energy mix. In Poland, the current reliance on coal means that electric boilers do not yet offer the same emission reductions. Germany, with a mix of a significant renewable energy share but also coal, falls between the two: electrification can reduce emissions when it is cost-competitive with fossil gas.
These insights point to a forward-looking strategy for countries with carbon-intensive grids. Rather than pursuing full electrification immediately, hybrid and flexible systems can drive industrial emission reductions while avoiding short-term drawbacks. Since electric boilers require relatively low upfront investment, their business case is viable even when used intermittently. For countries like Poland, continued expansion of renewable energy will be key to enabling electric boilers to operate flexibly and reduce emissions in the future. However, the fact that e-boilers would initially replace ageing coal-based appliances – before displacing newer gas appliances – means that even there, electrification would cut overall emissions.
Flexible electrification can reduce both emissions and costs compared with the use of gas
The opportunity lies in prompt action
Industrial electrification is a clear no-regret option, with the risk of higher emissions limited to a small and rapidly decreasing number of cases. Concerns over indirect emissions should therefore not delay urgently needed investment into clean technologies like heat pumps and e-boilers. The investment decisions taken today will determine the path for decades to come and any delay increase the risk of locking in fossil fuel dependencies and therefore high emissions. Alternative approaches such as sustainable biomass and hydrogen present less certainty: their future availability remains unclear, and they will be needed for low-carbon industrial feedstocks.
The following three clear principles can help the EU and national governments to design robust industrial decarbonisation support schemes under the forthcoming Industrial Decarbonisation Bank and nationally:
Prioritising electrification where efficiency gains are considerably high, notably when process heat can be generated via heat pumps. However, electric solutions for higher temperatures are also a no-regret option in most EU countries.
Deploying flexible and hybrid solutions, particularly in countries with more carbon-intensive power mixes. These approaches allow industry to reap early electrification benefits while avoiding short-to medium-term emissions increases that could undermine climate gains over the asset lifetime. Flexible operation also delivers economic and environmental value, making it relevant in countries with a cleaner grid as well.
Accelerating the deployment of renewables, to ensure that electricity supply gets cleaner and cheaper as demand rises.
If designed and implemented well, industrial electrification can cut fossil fuel dependence and emissions while strengthening Europe’s industrial competitiveness and resilience.
