Industrial electrification is now a security imperative, finds Oxford analysis
Industrial electrification is becoming a matter of economic security as well as decarbonisation, according to new analysis from researchers at the Environmental Change Institute at the University of Oxford.
The new report, 'High Voltage: The global potential for industrial electrification' finds that continued reliance on fossil fuels leaves 75% of global industry exposed to recurring price shocks, while electrification may offer a pathway to more stable and resilient energy costs.
Recent disruption linked to tensions around the Strait of Hormuz is among the latest examples of a broader pattern the authors identify. The 2022 Russian gas crisis forced widespread factory closures and production shifts across Europe and beyond, with many energy-intensive industries yet to fully recover. The authors suggest that such shocks are not isolated events, but symptoms of a structural vulnerability tied to fossil fuel dependence.
The impacts have been wide-ranging. In Asia, the 2022 LNG price spike forced factory shutdowns in Pakistan and Bangladesh and drove up costs for manufacturers in Japan and South Korea. Tensions around the Strait of Hormuz are once again feeding through into higher energy prices, renewing pressure on industrial producers across the region. The report notes that fossil fuel price shocks have become a repeated risk for industry globally.
“Industry has now lived through two major fossil fuel shocks in three years. First the 2022 gas crisis and now Hormuz. At some point you have to ask: how many times does the alarm have to go off before we change the system?”
Industry runs almost entirely on fossil fuels and is therefore among the sectors most exposed to these risks, the authors note. Yet, despite this exposure, it has been among the slowest to transition.
The analysis highlights that technologies to electrify industry are increasingly available at scale. Recent developments cited include the delivery of a 95-tonne, 16-metre evaporator for one of the world's most powerful industrial heat pumps at BASF's Ludwigshafen chemical site, and the commissioning of Southeast Asia's first industrial heat battery at a cement plant in Saraburi, Thailand, built with local supply chains in eight months. The authors point to these projects as evidence that industrial electrification is moving beyond pilot stages.
Professor Rosenow added: 'The technology to electrify industry exists today. What's missing is the political will to fix the price signals and build the grids that would make it happen at scale'
“What surprised us most in this research is how strong the convergence is across two completely independent lines of evidence. Detailed engineering studies and 1,600 global climate scenarios both point to the same conclusion: up to 90% of industrial energy demand could ultimately be electrified. The potential is not the constraint. The question is whether policy moves fast enough to realise it.”
The report finds that key electrification technologies - including heat pumps, electric boilers, heat batteries, and resistance heating - are already proven and commercially available, but that deployment is being constrained by policy and market barriers.
Among these, electricity prices remain relatively expensive compared to gas in many regions due to legacy tax and levy structures. The authors suggest that reforming these price signals - through electricity pricing reform, carbon pricing, and targeted support for electrified industrial heat - will be important to accelerating progress.
Grid access is identified as another significant constraint. Even where the technology and economics are favourable, long connection timelines can stall industrial projects. The report calls for streamlined permitting, anticipatory grid investment, and prioritisation of industrial connections.
The authors also note that first-of-kind industrial electrification projects carry technology and integration risks that private capital is unlikely to bear alone, and point to instruments such as Carbon Contracts for Difference, grants, and concessional finance as potentially important tools for de-risking early deployment.
The report concludes that reducing fossil fuel dependence has implications beyond emissions reduction, with domestic clean energy potentially offering greater resilience to geopolitical disruption and price volatility.
Prof Rosenow concluded: 'The industries that electrify fastest will stop being victims of the next crisis. Every unit of fossil fuel eliminated from an industrial process is a unit that can no longer be held hostage by a pipeline shutdown, a Strait closure, or a price spike.'
Read the report, 'High Voltage: The global potential for industrial electrification', on the Environmental Change Institute website.
