Interview with Christian Schützenhofer from AIT

Interview

APG experts met with Christian Schützenhofer of the Austrian Institute of Technology (AIT) to gain a better understanding of the industry's perspective. Under AIT’s leadership, several possible trajectories for the decarbonization of the industrial sector were mapped out as part of large-scale projects - in particular the innovation network "New Energy for Industry" (2023) and the study "transform.industry" (2024) - with the broad involvement of industry and research, which also represent an important data basis for the energy system model in the context of the zusammEn2040 project.

APG: Good morning, Mr. Schützenhofer! Thank you for taking the time. We would like to start by asking you: Can you describe the biggest challenge from an industry perspective in one sentence?

Schützenhofer: (Laughs) One sentence will probably not be enough, but essentially the challenge for the industrial sector lies in the multitude of endogenous and exogenous parameters that have to be taken into account when making decisions. On the one hand, massive investments must be made to achieve decarbonization. On the other hand, the industry is - more so than in the past - dependent on developments in the overall setting that it cannot influence directly. This results in certain risks. Nevertheless, I would like to emphasize right away: We have learned in our projects that the industry is willing to invest and thus make its contribution. The question on which everything hinges is "how."

APG: When you talk about the "overall setting" do you also mean developments in the energy system?

Schützenhofer: Exactly. We are now facing a complete conversion of the entire energy system. There will be many times when energy prices will fall due to the availability of renewables. Supply will be better secured through increased domestic generation. However, due to the fluctuations in supply, we need a massive expansion of the grids.

APG: What are the challenges of this conversion?

Schützenhofer: Of course, massive investments in new facilities are necessary at first. However, these investments can be written off over a long period and are therefore more or less easily projectable items on the balance sheet. One of the most important conclusions from our research is that the costs and availability of different energy sources and raw materials are central to the success of the decarbonization of the industrial sector. However, it is precisely these issues that are fraught with the greatest uncertainties because developments in the energy system are difficult to predict.

APG: How can we deal with these uncertainties?

Schützenhofer: First of all, it should be mentioned that developments over the next ten years are relatively easy to predict, as it is comparatively easy to know what technological developments can be expected over this period. Investments for this period can therefore also be regarded as relatively secure. After that, the uncertainties become greater. To deal with these uncertainties, we have defined various trajectories and scenarios in our studies together with the industry, which show different development options - taking into account the necessary investment costs.

APG: What are the differences between these scenarios?

Schützenhofer: Using the scenario-based approach, we try to map, for example, which raw materials and energy sources will be in demand in the future or how much innovation will take place in different areas. Of course, a multitude of factors are playing a role in this context and the industry is monitoring developments in politics and technology very closely. For example, it is now obvious that CO₂ capture will be a factor in the future. At the same time, it remains to be seen whether and how the captured CO₂ can also be utilized or transported. The question also arises as to where the added value of the future production of raw materials will transpire. If we believe in a strong European hydrogen economy, the framework conditions for the industry will also change. At the same time, it may also have advantages for our industry if at least some of the hydrogen is produced in Austria in the future.

APG: So this is about security of supply and self-sufficiency?

Schützenhofer: Not only that. The aspect of economic viability is also a central issue. We will need more energy in the industrial sector in the future. Austria is a small country and will have to import a certain amount of this energy. However, it is still not clear from which sources this energy will come and at what price it can be produced and imported. This naturally gives rise to enormous dependencies and issues that affect developments in other European countries - with regard to the energy system, but, of course, also with regard to economic considerations for the industry.

APG: What role does electricity play in these developments? 

Schützenhofer: The price of electricity is the central factor for all decisions. On the one hand, electrification offers enormous opportunities from an industrial perspective. Electrified processes can be controlled much more precisely than combustion processes. Electrification therefore offers potential cost savings. On the other hand, the costs of the above-mentioned CO₂ capture but also the production of hydrogen, ultimately depend on the price of electricity. It can therefore be said that the industry's investment decisions essentially depend on the availability and price of electricity.

APG: Where do you see the importance of energy system modeling in this context? In particular, regarding the use of the data from your studies in our scenario analysis model.

Schützenhofer: Our study shows aggregated data in five-year increments. This provides information on overall energy demand and structure. Based on this, models with a high time resolution are essential. Seasonal cycles, weekday cycles, and the weather must be mapped to model these variances and thus reduce the uncertainties mentioned above. Some things are amplified and some things even out. We need to know how these factors interact and what are effective instruments in unfavorable cases.

APG: Thank you for the interview!

Additional links:

Dekarbonisierungs­szenarien - NEFI