Decarbonising process heat

Process heat offers one of the greatest opportunities to improve energy efficiency and reduce energy emissions. It contributes to approximately 8% of New Zealand’s total greenhouse gas emissions. 

What is process heat?

The International Energy Agency defines process heat as energy “primarily used for warming spaces and industrial processes”. This is often in the form of steam, hot water or hot gases.

In a New Zealand context:

• Energy (including transport) contributes to 40% of New Zealand’s total gross emissions. Process heat makes up one-third of our overall energy use and contributes approximately 8% of gross emissions
• 56% of process heat is supplied using fossil fuels, mainly gas and coal.
• 84% of process heat is used in industry, particularly by manufacturers that turn resources into products. For example, using heat to process wood into pulp and paper, and milk into milk powder, as well as sanitising equipment.
• Two-thirds of process heat is used for low (less than 100°C) and medium (100-300°C) temperature requirements; the remaining third is used for high temperature requirements.
• The commercial sector uses 9% of New Zealand’s process heat, mainly for space heating in large buildings and offices.
• The public sector uses 4% of our process heat. For example, hospitals use steam for sterilisation and heating buildings.

Getting process heat decisions right is important because the investments (such as boilers) tend to have long economic life spans of (15 to 20 years), although they are often used for much longer periods of time (20 to 40 years or more in some cases).

Decarbonising process heat in the Emissions Reduction Plan

The government is required to set the first three emissions budgets and publish an Emissions Reduction Plan to meet the first emissions budget by 31 May 2022.

The Emissions Reduction Plan must target key abatement opportunities and transition critical sectors with sector-specific interventions, including the energy and industry sectors.

Emissions Reduction Plan

One of the biggest opportunities to reduce industrial emissions is through the decarbonisation of process heat. There are government policies and incentives to further enable this sector to transition away from fossil fuelled process heat and help New Zealand meet its climate goals.

Policies and initiatives

National Direction on industrial greenhouse gas emissions

The Ministry for the Environment and MBIE are leading work to support councils’ decision- making on greenhouse gas discharges when planning for and consenting air discharge permits from process heat.

A discussion paper on the national direction was released in April 2021 for public consultation. Following the feedback received during the consultation, Cabinet has approved the development of a National Policy Statement (NPS) and National Environmental Standard (NES), which will introduce nationally-consistent policies and rules to decarbonise process heat.

The policy intent is to ban new low- and medium-temperature coal boilers and phase them out those that are already in use by 2037. It also requires sites with material emissions from process heat to prepare GHG Emission plans and adopt the best practicable option to reduce emissions.

Read the discussion paper on the Ministry for the Environment's website:

Phasing out fossil fuels in process heat: national direction on industrial greenhouse gas emissions consultation document(external link) — Ministry for the Environment

The NPS and NES on industrial GHG emissions are scheduled to be introduced later in 2022.

Government Investment in Decarbonising Industry (GIDI) Fund

The GIDI Fund was established to accelerate the decarbonisation of industrial process heat and to contribute to the COVID-19 recovery by stimulating the domestic economy and supporting employment.

Government co-investment is available for New Zealand-based private sector businesses that have committed to decarbonising their processes to help remove barriers to accelerating their decarbonisation goals.

The fund is administered by the Energy Efficiency and Conservation Authority (EECA) on behalf of the government through a contestable process for $69 million of capital grants. All three rounds of the GIDI Fund have now closed. All funding is expected to be allocated by March 2022.

Approved GIDI projects(external link) — EECA

Round 1 of the GIDI Fund:

Government delivers next phase of climate action(external link) — Beehive.govt.nz

Round 2 of the GIDI Fund:

Government invests in reducing industry emissions(external link) — Beehive.govt.nz

Co-funding(external link) — EECA

EECA’s business programmes

The Energy Efficiency and Conservation Authority (EECA) provides a variety of business programmes, including the Energy Transition Accelerator, Sector Decarbonisation Programme, and Technology Demonstrations, to help companies with energy efficiency and emissions reduction.

In Budget 2021, EECA received a funding boost of $8.1 million per year to expand its business programmes. This funding will be used to scale-up the support EECA provides to New Zealand businesses to reduce their emissions through increasing uptake in low emissions technologies and energy efficiencies.

Read more about EECA’s business programmes on the Gen Less website:

Join the low carbon economy(external link) — Gen Less 

Additional initiatives

There are additional policy initiatives in development to remove barriers and support companies to decarbonise process heat. These initiatives include:

• A proposal to introduce a mandatory energy use and emissions reporting scheme for large energy users which was consulted on as part of the Emissions Reduction Plan.
• Providing Publicly Available Specifications, including for high-temperature heat pumps and biomass boilers, available through Standards New Zealand.
  High-temperature heat pumps(external link) — Standards New Zealand
  Biomass boilers for small and medium heat loads(external link) — Standards New Zealand
• Potential amendments to the Energy Efficiency (Energy-Using Products) Regulations 2002, which were consulted on in the June 2021 paper “Energy efficient products and services: A regulatory reform discussion document”:
  Response form: Energy efficient products and services - A regulatory reform discussion document [DOCX, 107 KB]

Discussion papers

The New Zealand Energy Efficiency and Conservation Strategy 2017 – 2022

Work on industrial decarbonisation and process heat was established through the Process heat in New Zealand (PHiNZ) initiative in 2017, which was a response to one of the priority goals – the renewable and efficient use of process heat – in the The New Zealand Energy Efficiency and Conservation Strategy 2017 – 2022. Since 2017, several discussion papers have been released to improve understanding of the challenges and opportunities, and identify possible role for government action.

Accelerating Renewable Energy and Energy Efficiency discussion paper

In December 2019, MBIE published a discussion paper, Accelerating Renewable Energy and Energy Efficiency. Part A of this paper focused on encouraging energy efficiency and the uptake of renewable fuels in industry. 

Process Heat in New Zealand: Opportunities and barriers to lower emissions

In early 2019, MBIE and EECA published a technical paper, Process Heat in New Zealand: Opportunities and barriers to lowering emissions. Feedback on that paper has informed the development of the government’s plan to ensure we have the regulatory and policy settings we need to accelerate energy efficiency and the uptake of renewable fuels in industry.

Read the technical paper and submissions:

Process Heat in New Zealand: Opportunities and barriers to lowering emissions

Resources

The factsheets and other resources below summarise our current understanding of process heat.

Biomass fuel switching opportunities for industrial process heat: a map of planted areas across the regions, matched with coal and petroleum demand

Demand for coal and Liquid fuel fuels for industrial process heat: A map of New Zealand showing demand for coal and Liquid fuel fuels for industrial process heat by region.

More information

Sign up to EECA's quarterly Business Newsletter:

Sign up for news(external link) — EECA

Gen Less's website has tips on how to save energy and increase energy efficiency of process heat systems:

Process heating systems(external link) — Gen Less

Any queries about process heat in New Zealand can be sent to energymarkets@mbie.govt.nz