Industry Refactoring

Fossil fuels have been cheap. They have been used to produce electricity, reduce iron, make fertilizers and heat homes.
This has caused large carbon dioxide and methane emissions that can not continue. Fossil fuels will be phased out.


Nuclear power plants, wind power and solar power will have to replace coal and natural gas electricity generation.
Wind and solar are variable. Adding some of those into an electricity generation mix can easily have a positive effect of reducing carbon emissions. Hydropower can also act as a leveler.
When you add more, trying to get rid of all the fossil fuels, the variability will cause more and more problems.
This can be also alleviated with making the demand flexible, where practicable.
At some point storing electricity will become necessary.



Electric cars are replacing oil fueled ones. Most current electric cars on the market today use lithium ion NMC (Nickel Manganese Cobalt) batteries. Cobalt and nickel are relatively expensive and form a large portion of the cost of such a battery.
However, some portion of the cars, with somewhat less range, use lithium LFP (lithium iron phosphor) batteries. These don’t involve any cobalt or nickel.
For large scale adoption of electric cars, it’s likely that the early expensive technologies will be ditched for scalable ones.
NMC batteries have also higher propensity for thermal runaway than LFP. For example Tesla encases NMC battery elements in small cylinders, and then glues them into one big pack with foam. This makes changing elements impossible.
LFP batteries can use large prismatic casings, making manufacturing potentially cheaper, and giving the possibility to remove one casing in maintenance.

Static batteries

Current static lithium ion battery plants usually tend to have a capacity of one to four hours at full power. For example a 100 MW power battery with 400 MWh energy capacity.
LFP technology might be still limited by the availability of lithium, even if the other materials were abundant.
Sodium ion batteries are one way around that, but the technology is still immature.
Also special graphite electrodes in lithium batteries can be a resource bottleneck – silicon electrodes in sodium ion batteries can work around that.
A sodium ion battery is heavier than a lithium ion, but it shouldn’t matter in the static setting – as the total cost and scalability should be way better. This is an area to watch.

Flow batteries

Flow battery technology is not yet widely deployed. The technology stores energy in liquid electrolyte or electrolytes, and has only small electrodes. This means if the electrolyte is cheap, one can have very large amount of storage with low power for very low cost.
State of the art is vanadium flow batteries, but vanadium is quite rare and expensive so it’s not very likely to scale.
Promising alternatives are either cheap bulk material electrolytes or cheap organic molecules. Research continues.
Again, energy density might not be good, what is more important is the total cost of the battery. Also round trip efficiency might not be as good as in lithium ion.
Flow batteries would be a better fit for longer term storage, days or weeks instead of hours.

Hydrogen as electricity storage

Hydrogen suffers from a few key problems. Electrolyzers use platinum and are expensive. Round trip efficiency from electricity to hydrogen and back is bad. Hydrogen as gas is extremely low density. Liquid hydrogen needs to be stored at 20 K, lowering round trip efficiency more and complicating matters like storage and transport greatly. Liquid density is still only one sixth of methane’s, which can be stored at 90 K. Hydrogen is also a small molecule that leaks out of very small holes and embrittles certain materials.


District heating

Dense cities in cold climates use district heating, either with steam or hot water. The heating generally happens in a few coal or natural gas power plants. This can be relatively efficient if the heat is seen as byproduct of electricity generation that would happen anyway.
Some cities in the middle of forests could perhaps be heated by wood or peat but it is not possible for large metropolises.

Nuclear district heating

Nuclear plants are built far away from cities, and piping the heat would lose some of the energy. It is nevertheless an alternative worth exploring.

Modern small modular reactors (SMR) could potentially be built closer to cities and could be used for district heating. Some SMR designs don’t have any electricity production capacity, only producing hot water that is the right temperature for district heating. These purpose designed reactors could be extremely simple, safe and low cost.
District heating works usually best if not too much of it is dependent on one power plant. This way, if one plant (or pipe) malfunctions, the city can still be kept warm. A regular nuclear power plant is often oversized for this purpose, easily filling more than a quarter of a large city’s district heat usage.

Heat pumps for district heating

Ground heat pumps could be used for creating district heat, but the problem is the high temperature. Heat pumps operate a lot more effectively if they can heat a large radiator (like floor heating) to 30 C than to heat a small radiator to 70 C.
Coal steam turbine plant waste heat is quite hot and the district heat grid can run at around 100 C temperature. All the buildings built over a century have small radiators as a consequence. Houses that predate district heating often had coal or wood furnaces, and also had small high temperature radiators. Hence there is a mismatch between existing urban buildings and heat pumps.

District cooling

Many office buildings and newer houses also heat the incoming air (and take most of the energy from outgoing air). This air can also be cooled. This cooling can be delivered by sending cool water through the district heating pipe network – called district cooling. The central power plant can make this cool water with the waste heat from electricity generation process with absorption cooling method. This can be very efficient compared to heat pump cooling.

House heating and cooling

Some cities have gas networks and the houses have natural gas burners. This is something hydrogen aims to replace without having to change the infrastructure. But hydrogen might leak out of the natural gas pipes. This is also a politically risky solution as the source of energy can not be switched like with district heating. There is a sole source for heating energy.
Ground heat pumps in cold climates and air heat pumps in warm climates could be a better solution.
Air heat pump efficiency lowers when outside temperatures get very cold. Ground heat pumps have much higher investment cost, but they are immune to changes in outside temperature.
Heat pumps can be used for cooling as well.


Nitrogen fertilizer making takes nitrogen (N2) from air and uses hydrogen to make ammonia (NH3). This can be turned into ammonium nitrate or ammonium sulfate. This is a good use case for hydrogen. Hydrogen is directly needed in the process, it is for example not converted back into electricity.
Places with cheap renewable electricity like Australia could create ammonia or the nitrate or sulfate and export it, as indirect electricity export. It is much easier to ship these products than hydrogen.

Iron reduction and steel making

Iron ore is an oxide of iron. It is reduced to iron pellets, currently using coal. Hydrogen can also be used and is being used in early facilities. Direct electrochemical reduction is also being researched. Hydrogen will probably be just an intermediate model.
Steel making from iron pellets and additives already happens with electricity in arc furnaces. Hydrogen has no role.
The iron reduction and steel arc furnace can happen in the same plant, in which case it is called a combinate. But iron pellets can also be shipped overseas to a steel factory.

Industry refactoring

Iron and steel production in the past was placed where coal and iron ore were properly available. Coal can not play a role in the future. It is likely that many current heavy industrial areas will not exist in the future and new ones will be created elsewhere.

This will have a trickle down effect. Currently, iron mines are not opened in places from where the ore is not cheap to transport to reduction with coal. So iron mines could move. If an area has cheap electricity, it might make sense to create an iron ore mine, a reducer and steel factory there.
Then, large users of steel like shipbuilding or car manufacturing might want to locate close to the steel factory. Then, contractors that make ship or car components. And so on.

This could have large effects on some nations as their industrial areas of strength can not compete anymore. They might try to prop them up with subsidies, or lobbying for coal emission exemptions. But the writing could be on the wall and investors would be wary.

This is the great industry refactoring that can happen.

Post scriptum: The path not taken

There is one alternative that would lessen the industry refactoring somewhat, but not completely: build a lot of nuclear power. Nuclear power decouples electricity generation from physical location as one doesn’t need wind or sun for it. However, it’s unlikely for electricity price to go as extremely low for periods that is possible with renewals, the position which fertilizer production, iron reduction or steel making would exploit. It would be a way how existing players with a lot of heavy industry but lack of renewable energy resources could attempt to stay in the race.


I have not added precise numbers or sources to the text. This is a blog post without advertisement provided to you free of charge. 🙂

Some great but not exhaustive material:

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