Electrification will reduce the level of energy demand across all sectors
DEMAND REDUCTION Final energy demand could be reduced up to 40% by switching to renewable energy sources like wind, solar photovoltaics and hydro-electric power where it is feasible
GROUNDHOG DAY Energy efficiency programmes continue to be focused on increasing the energy efficiency of fossil fuel-based processes, delaying the phase-out of polluting forms of energy
KEY QUOTE Not only is energy efficiency helpful for the [energy] transition, but the transition is also helpful for energy efficiency
During the industrial revolution in 18th century Britain, and elsewhere in Europe and the United States the following century, coal was combusted to turn steam engines providing power to factories. As the 19th century ended, internal combustion engine automobiles fuelled by petrol began to take the place of horse-powered carriages.
Now another revolution is at hand. Emissions from fossil fuels need to be slashed to practically zero to meet international commitments laid down in the Paris Agreement to limit the rise in global temperatures to “well below” 2°C and avert the worst effects of climate change. This means not only that fossil fuels will need to be replaced by renewable energy but also entails a change in how energy is converted and used.
Nick Eyre of the University of Oxford says the transformation underway can be seen as a move from the energy system introduced with the industrial revolution in which heat from fossil fuels provides work into one in which work from renewable energy, in the form of electricity, also provides heat.
In this new world, steam and gas turbines will become increasingly rare and be replaced with technologies like heat pumps and electric vehicles (EVs). With the energy transition, “You don’t just change the input fuels,” says Eyre. “The whole set of technologies changes.”
The combustion of fuels to produce power is accompanied by significant heat losses. The conversion of power to heat is more efficient and the advent of an energy system relying heavily on electricity, and particularly the electrification of heating and transport, also brings with it sizeable energy savings. EVs typically require less than one-third the energy of internal combustion engine vehicles and heat pumps less than one-third of boilers.
Eyre calculates that final energy demand could be reduced up to 40% by switching to renewable energy sources like wind, solar photovoltaics and hydro-electric power where it is feasible and using green hydrogen when direct electrification is not an option. Demand reduction in buildings and transport can exceed 50%, Eyre estimates.
“Not only is energy efficiency helpful for the [energy] transition, but the transition is also helpful for energy efficiency,” says Eyre.
Key assumptions behind Eyre’s analysis are that heat pumps provide most low-temperature heat, EVs predominate in light vehicle fleets and hydrogen is used mainly in fuel cells in heavy vehicles.
“In the energy efficiency community, there’s still a big focus on the marginal, incremental savings that can be made from energy efficiency measures, but you need to step back and look at this huge opportunity offered by electrification,” says Jan Rosenow of advisory body the Regulatory Assistance Project (RAP).
Efficient process Electrification means energy will be used more efficiently, reducing demand as a result
USING RESOURCES EFFICIENTLY
While many electric applications are efficient in terms of final energy use, Thomas Boermans of German energy group E.ON believes the focus on the energy transition should be targetting a “sustainable and convenient [energy] system” rather than on electrification per se. While electricity often fits the bill for being sustainable and convenient, he notes that there are also inefficient ways to use electricity such as one-for-one direct heating.
Opting for the most efficient energy resources will help limit the renewable energy resources needed to meet decarbonisation goals, which will be immense even with efficiency gains. “By reducing the total amount of energy we need by taking advantage of these efficiencies [from electrification], we will need a lot less renewables to decarbonise,” notes Rosenow.
Under most decarbonisation scenarios, the role of electricity is seen growing strongly. The International Energy Agency’s (IEA) net-zero pathway shows electricity consumption growing to represent nearly 50% of all energy consumption in 2050, up from about 20% currently. Eyre has calculated that about 77% of energy could potentially come from direct electrification and the remainder from green hydrogen.
Michelangelo Aveta of power trade association Eurelectric says its clear efficiency advantage means that direct electrification should be favoured for the majority but certainly not all end uses.
“If you need to decarbonise an aeroplane, you can’t do that with direct electrification or you would need a hell of a battery,” says Aveta, noting that using renewable electricity to create a synthetic fuel would make more sense in this case. “It’s a matter of making the best use of the resources you have at hand and using those resources that might be scarce where they are most valuable,” he says.
The use of green hydrogen—hydrogen produced from the electrolysis of water powered by renewable electricity—as a fuel source is far less efficient than direct electrification. Rosenow notes that a hydrogen fuel cell vehicle requires about three times more electricity than an EV and hydrogen used in heating would use about five times more electricity than a heat pump.
One mitigating factor is that fuel cells enabling the conversion of hydrogen chemical energy directly to work are significantly more efficient than fossil fuels at the point of final energy conversion.
Geert Decock of Transport & Environment (T&E), a clean transport NGO, stresses the importance of considering the different renewable energy requirements for transport and other end uses when choosing an energy source. Less efficient solutions will require more green energy, which in turn means also more land will be needed to house wind and solar farms. “You can’t just say you’re going to put hydrogen fuel cells on trucks; you also have to say where you are going to get that extra renewable energy,” Decock says.
A 2020 study by consultancy Ricardo Energy & Environment, commissioned by T&E, places the renewable electricity needs for the decarbonisation of transport in the European Union at 2414 terawatt-hours (TWh) in 2050 in a base case scenario assuming 100% electrification for all road transport.
Green energy requirements jump to 2797 TWh in a “higher hydrogen” scenario in which 50% of buses and heavy-duty trucks would run on hydrogen but 90% of all cars and other road vehicles would still be electric.
A “higher synthetic hydrocarbon” scenario—using only man-made hydrocarbons produced from green hydrogen in shipping and aviation and a small share in road transport—would require a total of 3598 TWh of electricity or 40% more than the base case scenario.
Given the inefficiency of using hydrogen and synthetic hydrocarbons, they should be targeted for uses where there is a lack of alternatives, primarily aviation and shipping, believes Decock.
Indeed, the Riccardo Energy & Environment study shows the renewable electricity needed in the EU for aviation and shipping in the base case scenario will see a 24-fold increase from 2030 to 2050, rising from just 43 TWh to 1274 TWh as decarbonisation efforts in the two sectors get underway in earnest.
Aside from shipping and aviation, green hydrogen is widely expected to be an essential element in the decarbonisation of hard-to-abate industries like steel and cement manufacturing (page 62) and as a replacement for fossil fuels that are used as feedstocks.
There may also be a supporting role for using green hydrogen in power plants to replace flexible, gas-powered plants, despite the inefficiency of using electricity to produce hydrogen that is once again transformed into electricity.
Although decarbonisation will require a move towards 100% renewable electricity, one of the implications of the efficiency gains of electrification is that emissions can often be reduced even when the share of fossil fuels on the grid remains relatively high.
A bonus of electrification is that it ceases burning fuels at the point of use, getting rid of tailpipe emissions from cars that contribute to urban pollution and improving air quality in buildings.
T&E found that, on average, electric cars in Europe generate almost three times less CO2 than the equivalent petrol or diesel car over their lifecycle, including the embedded emissions from the energy-intensive production of batteries.
Even in a worst-case scenario—an electric car with a battery produced in China and driven in Poland—CO2 emissions are still 22% less than for a diesel car and 28% less than petrol. On the other hand, an electric car with a battery produced in Sweden and driven in that country can emit 80% less CO2 than diesel and 81% less than petrol.
Meanwhile, in a 2020 analysis, the Rocky Mountain Institute (RMI) concluded that replacing gas boilers with air source heat pumps would result in a reduction in CO2 emissions over the 15-year lifetime of the heat pump in 46 out of the 48 US contiguous states, or about 99% of US households. The exceptions were Wyoming and Utah, where electricity grids are still highly reliant on coal.
The carbon intensity of power grids on both sides of the Atlantic Ocean has been falling and is set to decline further as solar PV and wind power continue to expand their share of the electricity mix. Germany, the UK, the US, and Canada are among the many countries that have committed to emissions-free electricity by 2035.
EVs RACE AHEAD
As battery prices come down sharply and the range of EVs improves, the electrification of cars is already moving full speed ahead. Sales of electric cars reached 6.6 million in 2021, representing 9% of the global car market and more than doubling from the year earlier, data from the IEA shows.
The well-to-wheel efficiency of electric cars now stands at about 77%, according to data from T&E, compared to about 33% for hydrogen fuel cell cars. On the other hand, figures from the US Department of Energy (DOE) indicate that only 12-30% of the petrol put into a car moves it down the road, depending on the drive cycle.
Car manufacturers are investing heavily in EVs, as lawmakers increasingly promote their use. The European Commission has proposed that all news cars be emission-free by 2035, in what is seen as an effective ban on traditional internal combustion engine (ICE) vehicles. California is also planning to ban the sale of new gasoline-powered cars by 2035.
Electrification is also increasingly seen as the best option for other forms of road transport. “Technical and economic developments in battery and fast-charging technologies could soon make fuel cell electric vehicles, which run on hydrogen, superfluous in road transport,” Patrick Plötz of Fraunhofer Institute for Systems and Innovation Research wrote in an article published in Nature Electronics in January 2022. “If truck manufacturers do not start the mass production of fuel cell trucks soon to reduce costs, such vehicles will never succeed in low-carbon road transport.”
Another key technology that improves the efficient use of energy via electrification is heat pumps, where one unit of energy input generally yields about three units. The multiplier can rise to as much as six for large heat pumps used in district heating systems.
In its pathway to net-zero by 2050, the IEA sees 1.8 billion heat pumps installed in buildings in 2050, providing 55% of global energy demand, up from about 7% today. Partially due to higher upfront costs, the market is not yet on track to reach the 2050 target and growth in the heat pump market has been uneven. There are signs the market is accelerating, however. Heat pump sales rose by 21% in the US in 2021 and the European Heat Pump Association (EPHA) estimates that sales in Europe increased by over 25% in 2021 to over two million units.
High gas prices have improved the economic case for operating heat pumps and an increasing number of governments are putting into place policies and incentives to encourage their use.
In its coalition agreement, the new German government stipulated that all new heating systems must run on a minimum of 65% renewable energy as of 2025, a move that is expected to further encourage the purchase of heat pumps. Heat pump sales in the country already rose by 25% in 2021, driven in part by the introduction of a carbon tax on heating fuels.
As it seeks to wean itself off Russian gas, France said it would provide financial support for heat pumps and cease subsidies for fossil fuel heating. In Poland, regulations phasing out the use of coal in single-family houses helped to drive a 60% jump in heat pump sales in 2021.
Eurelectric’s Aveta notes that heat pumps work best in buildings that are energy efficient themselves, making insulation and other measures to renovate the building stock a priority in policies to support the uptake of heat pumps. He also points to the need to train skilled workers to instal heat pumps and the need to, “Eliminate the incentives some countries still have for fossil fuel-based heating solutions.”
Despite the efficiency gains that can be garnered with electrification and the need to move towards renewable energy sources, RAP’s Rosenow notes that many energy efficiency programmes have and continue to be focused on increasing the energy efficiency of fossil fuels. “This perpetuates the deployment of these technologies,” he says.
A study published by Cool Products, an NGO that promotes ecodesign and energy labelling, found that 16 out of 27 European Union member states were still financing gas boilers and eight member states still backed oil boilers. At the time, only seven member states provided no support for fossil fuel heating.
As the energy transition progresses, the focus will increasingly shift to not simply adopting more EVs and heat pumps but also making these technologies as efficient as possible.
Energy efficiency labelling already exists for heat pumps. Continuing to raise the bar for standards and labels to keep up with technological progress in key heating markets could help drive sales towards higher-end products, says the IEA.
“For cars, we’re still in the moment that as long as you are electric, you are green,” but at a certain point it will also be important to set energy efficiency standards for EVs, says Aveta. One possible model could be the fuel mileage standards now in place for new cars in the US.
“There will be more or less efficient EVs and heat pumps” and applying standards like those now in force for technologies running on fossil fuels is a sensible approach, adds Eyre. “We need to be more aggressive in speeding up the energy transition and in ensuring the most efficient options are taken up,” he says. •
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