The EU must double electrification goals to meet climate and clean energy targets, says analysis by the European Commission. Industry is concerned current policies do not support this vision and have formed an Electrification Alliance calling for legislative changes

POTENTIAL
Electrification of heating, cooling and transport is the most direct, effective and efficient way of decarbonising energy use, says Eurelectric, an electricity industry association. It says electrification can achieve a 95% reduction in EU emissions by 2050

SYNERGIES
For an energy economy in Europe with net zero emissions, a gas contribution will be necessary, agrees Eurelectric. Green hydrogen from electricity will be key to decarbonising heavy industry and could contribute to balancing the power system

KEY QUOTE
“Electrification has to be a no regret option”

Electrification of heating, cooling and transport, powered by renewables, is generally considered the backbone of the clean energy transition. To push for coherent lawmaking in Europe to expand the use of electricity, eight industry bodies plus the European Climate Foundation (ECF) launched an Electrification Alliance in a packed hall in Brussels in November 2019. Speakers at the event acknowledged that gas in the form of green hydrogen from renewables electricity will also play a part. All eyes are now on the incoming European Commission and its ability to marry industrial leadership with the aim of net zero emissions under the auspices of a Green New Deal. Led by lobby groups Eurelectric, WindEurope, SolarPower Europe, the European Heat Pump Association, the European Association for Electromobility, the European Association of Electrical Contractors, Smart Energy Europe and the European Copper Institute, the Electrification Alliance calls on EU and national policy makers to: “Acknowledge and support the crucial role decarbonised electricity and efficient electric technologies,” will play in achieving climate and energy goals. Policies are needed to support infrastructure and innovation, and to remove barriers to electrification, says the alliance’s declaration. “Electrification is the most efficient way of decarbonising,” said Gunnar Groebler, senior vice president at Vattenfall. The Swedish state-owned energy company says it has fully embraced decarbonisation with the aim of making fossil free living possible within one generation. It makes both climate and business sense to do so, argued Groebler. He stressed the importance of a European Green Deal and an industrial strategy that supports all companies during the transition away from use of fossil fuel. “It needs to cover the just transition so people are not left behind,” he said. Groebler cited the support afforded the wind industry at its outset and the need to: “Allow industry to invest in new technology without worrying how to pay upfront costs.” A similar story was told by BMW’s Andreas Klugescheid. “Electric vehicles (EVs) are one of the most prominent areas where electrification of a fossil fuel industry appears to actually be happening,” he said at the event in Brussels. “People are buying these vehicles. It is not a question of whether EVs will succeed, they are succeeding as we speak.” But investment in infrastructure and the introduction of appropriate regulatory frameworks to push reductions in carbon dioxide are necessary to achieve the full potential of electrification, said Klugescheid. He also called for industry and the energy sector to work together to create new business models on a global scale. For Nicholas Matten, managing director of Stiebel-Eltron, a heating and cooling company, reducing taxes on electricity is a key missing piece of the jigsaw. “At a very basic level, there is no level playing field as electricity pays a carbon tax while gas, for heating for example, does not,” added Dries Acke, energy systems director at ECF. The European Commission recognises the problem and has identified energy taxation as a work area for the new Commission, said Ditte Juul-Jørgensen, Director-General in the European Commission’s DG Energy. But she warned unanimity between all 28 member states is needed before any changes can be made to EU tax laws.

SECTOR COUPLING “More sector integration and sector coupling,” are also necessary to double the share of electricity in energy consumption by 2050, said Juul-Jørgensen. She identified investment and finance as the “biggest challenge” and stressed the need for “lots of private investment” in addition to EU funds. While industry is working with new partners, Marco Mensink, director general of the European Chemical Industry Council (CEFIC), suggested greater understanding of how sectors can better integrate to achieve climate and energy goals and allow power companies to make money was needed at an EU policy level. Massive volumes of renewables are needed to decarbonise chemicals and other heavy industries, he said. Moving from 20% renewables to 40% with a focus on electrification means creating a “totally different market” and “a complete redesign of power system,” he added. David Milborrow, a renewable energy analyst, is less convinced a total overhaul is needed to deal with significantly higher levels of renewables. “Forty per cent renewables is not necessarily a showstopper, although it will almost certainly require some grid strengthening,” he said. Jorgo Chatzimarkakis, secretary general of Hydrogen Europe, questioned the ease with which Europe’s power grids can be strengthened to manage a massive ramp up in electricity, citing the slow expansion of Germany’s grid, which in recent years has only achieved just over 1000 kilometres (km) of a planned expansion of nearly 8000 km, hampered by opposition from residents and local politicians. The alliance’s declaration sees a European Green Deal, as proposed by incoming European Commission president, Ursula von der Leyen, as the vehicle for progressing a carbon neutral economy powered by clean electricity. Von der Leyen has tasked the new Commission’s executive vice president, Frans Timmermans, with delivering such a deal. She wants him to boost the EU’s 2030 emissions target from a 40% reduction to at least 50% and put forward a comprehensive plan by 2021 to increase it towards 55%. She is also calling for him, within the new Commission’s first 100 days of office, to propose a European Climate Law including the commitment to go carbon neutral by 2050. The first presentation of the deal is expected at the next EU summit on December 12-13, 2019. ECF’s Linda McAvan, a former Member of the European Parliament, feels Europe’s green deal would only be successful if based on long-term thinking and investment that goes well beyond the political term of the new Commission. “This is not a five year project,” she said at the Brussels event. Confronting the “problem of gas” is also necessary for a successful green deal, said her ECF colleague Acke. It must become accepted policy that the volume of gas flowing through EU pipelines will decrease in the coming years and all use of unabated natural gas will end by 2050. At the same time, a net-zero industrial strategy must be developed. In charge of the EU’s industrial strategy will be French Commissioner-designate Thierry Breton, nominated for a broad internal market portfolio. Breton pledged in his hearing before the European Parliament to “push the industrial pillar of the New Green Deal” using measures such as a carbon border tax to help companies manage the green transition.

JOB CREATION The need to limit the costs of the transition and keep jobs in Europe was emphasised by all industry speakers at the Brussels event. “We need to protect industry and jobs and not let the jobs go to China as has happened with the solar industry,” said Matten from Stiebel-Eltron. He added, however: “Politicians need to be honest that doing nothing [about climate change] is most expensive.” Walburga Hemetsberger, CEO of SolarPower Europe said: “Electrification has to be a no regret option.” She urged a greater focus on job creation. The European Green Deal was either “a trillion costs or a trillion opportunities,” said CEFIC’s Mensink. “Money needs to be made in Europe, not China. We don’t need just transition funds if proper jobs are delivered.” Speakers suggested new jobs can come through growth in renewables and electrification, and also in green hydrogen. “The Eurelectric [decarbonisation] scenario shows there will be a gas component in the future energy system,” said the organisation’s Kristian Ruby. “If policy makers go for full decarbonisation, hydrogen could make up 5-10% of total energy consumption.” Energy intensive sectors in particular would need to transition to hydrogen from renewables as the only green option for some processes. Both Vattenfall and Germany’s largest steelmaker, Thyssenkrupp, are testing the use of hydrogen gas to reduce carbon dioxide emissions from steel production. To support the production of hydrogen from renewables electricity, ECF, Eurogas and others are pushing for a European electrolysers alliance to help the EU retain its position as a green hydrogen technology leader. “Europe is leading in the field of electrolysers, let’s build on it,” said James Watson, head of Eurogas.

HYDROGEN MARKET The challenge is for hydrogen to be derived 100% from renewable energy at an affordable cost to truly fit with a net-zero emissions economy. Eurogas and Hydrogen Europe believe more renewables electricity, with more curtailments of its production when grid capacity is satiated, will result in lower prices for electricity diverted for green hydrogen, helping bring down clean hydrogen’s cost. In an “optimised gas” scenario endorsed by the two gas organisations, consultancy Navigant allocates 1170 terrawatt hours (TWh) of renewable energy methane and 1710 TWh of hydrogen gas for use by the buildings, industry, transport, and power sectors, equal to about 270 billion cubic metres of natural gas, by 2050. Most curtailment of renewable energy in Europe currently occurs in regions with high penetrations of wind in electricity supply, but is limited. Milborrow said: “Studies show that in a well-integrated system, even with 30% of the energy coming from wind, curtailment should not result in more than 2-3% of energy being lost.” Wind energy tends to be concentrated in particular locations, such as northern Germany, where the electricity wires are not well interconnected to the grid serving big city populations further south. “A key factor is the capacity of transmission lines to the rest of the system,” continued Milborrow. “This can limit the amount of wind energy that can be assimilated. Under these circumstances, curtailment may be necessary although hydrogen generation may be possible if a market can be found where it can be sold economically.” Chatzimarkakis strongly believes in the availability of curtailed wind power for hydrogen gas production. He cited curtailment of 5.4 TWh of energy in 2018 in Germany, which, he claimed, if converted to hydrogen would be enough to fuel over 600,000 fuel cell electric vehicle for a year. Meanwhile, questions remain about how much of Europe’s existing gas infrastructure could transport hydrogen and the cost of adapting pipelines. “Many of Europe’s pipelines can carry hydrogen to some extent,” said Chatzimarkakis, though admitted: “It is very difficult to give a specific percentage.” His organisation is starting to analyse the situation. In the UK, some pipes are fit for purpose, while new pipelines such as Nordstream are 80% ready for business, said Chatzimarkakis. “What is missing are the compressors used to push the gas along.” Research shows in Germany it would cost €43 billion to make all pipelines fit for hydrogen, said Chatzimarkakis. “But we don’t need to refit all the pipes.” Instead, he suggested imports of green hydrogen from Africa could be part of the solution for Europe’s clean energy needs. Chatzimarkakis cited Timmermans, who, in his hearing before the European Parliament, said his future energy dreams included a partnership with Africa. The EU would help install solar energy to be transformed into hydrogen for transportation to Europe and other parts of the world, said Timmermans. According to recent work released by the Dutch University of Delft, existing gas transport infrastructure from Algeria and Libya to Europe via Italy and Spain could be converted for hydrogen and new hydrogen gas infrastructure built, with a first pipeline connecting Egypt and Greece to the main European gas grid in Italy. Such a “South-Nordstream’’ would imply investment of €16.5 billion, says the research, with an estimated levelised cost for hydrogen transport by pipeline of €0.005 a kilowatt hour or €0.2 per kilogram of hydrogen. Per unit of energy, hydrogen supply costs are 1.5 to five times higher than those of natural gas, concluded a report published by the International Renewable Energy Agency in September 2019. “Low-cost and highly efficient hydrogen applications warrant such a price difference,” it stated. Reducing the “significant energy losses” during the production, transport and conversion of hydrogen is critical to reduce costs, it warned.

ELECTRIC COSTS Eurelectric estimates at least 60% of the EU economy should be electrified by 2050 to achieve a 95% reduction in greenhouse gas emissions compared to 1990 levels. Such deep decarbonisation of the power sector and other parts of the economy, including transport, buildings and industry, requires annual average investment of €89-111 billion, estimates Eurelectric in its Decarbonisation Pathways report, plus investments to strengthen electricity network interconnections and reinforce distribution grids. By 2045, Eurelectric forecasts the investments would result in wholesale power prices of €70-75 a megawatt hour (MWh), significantly lower than cited in other energy transition projections, such as the €105/MWh estimated by the European Commission. Today’s wholesale market prices in Europe are typically €50-60/MWh. Eurelectric bases its projection on a sustained trajectory for rapid cost reductions of renewable technologies. Acke said he wants to see a green hydrogen market being created in Europe, but insists direct electrification of energy use, without the added cost of converting electricity to hydrogen gas, is “by a million times” the cheapest way to decarbonise if all decisions are based on contributions to climate action rather than other criteria. He backs his claim with reference to Fossil-Free Energy 2050, a report published earlier in 2019 by ECF that suggests households could save an aggregated €23 billion on energy bills if renovation and electrification are prioritised over green gas for heating buildings. “Natural gas may be cheaper [than electrification], but green gas is not cheaper,” said Acke. “We need to compare apples with apples.”

TEXT Philippa Nuttall Jones