Kristian Ruby, Secretary General of Eurelectric, an association of electricity producers, welcomes the recently agreed EU climate and energy targets for 2030. Suggesting that decarbonisation and electricity are two sides of the same coin, he argues for the correct regulatory framework to ensure a smooth integration of renewables and increased electrification
Europe has made important progress in defining its political response to the continued carbon pollution of our atmosphere. With its recent deals on renewable energy, energy efficiency and long-term planning, important pieces of the post-2020 regulatory framework are now emerging. The main outstanding element is the revised power market regulation, which should be agreed before the end of the year.
The European power sector supports the direction taken. In December 2017, the industry launched a vision with a clear commitment to develop a thriving European economy powered by carbon-neutral energy and to pursue efforts to decarbonise the electricity mix well before mid-century.
Two questions arise from the recent deals, however, a regulatory and a systemic one.
First, the regulatory framework must be consistent and the individual elements well-calibrated against each other. With renewables covering a higher share of our power production, we need an increasingly market-based approach to integrating them. Moreover, the impacts of increased ambition for renewables and energy efficiency on the carbon market should be analysed thoroughly and measures taken to ensure a meaningful carbon price.
Secondly, the power system needs to be able to manage increased amounts of renewable energy, the vast majority of which will come in the form of electricity, helped by the progressive electrification of energy use sectors. Increased electrification will be necessary to integrate the growing amount of renewables agreed for 2030 and, even more so, as we progress towards deeper emission cuts, as demonstrated by a study we conducted with McKinsey and Company.
It examines three different scenarios with different levels of ambition. The first is aligned with the EU’s current commitments under the Paris climate agreement, namely an 80% reduction in carbon dioxide emissions by 2050. The second assumes a situation where policy makers increase reduction efforts to 90% as part of international climate negotiations. The last scenario explores moving to fully decarbonising the European economy with reductions of up to 95% compared to 1990.
Across all the scenarios, the conclusion is clear: deep decarbonisation is doable, but will rely heavily on an increased uptake of electricity. In other words: electrification and decarbonisation are two sides of the same coin, even if the challenges in the individual use sectors are very different.
Transport, buildings and industry
The transport sector, responsible for a quarter of total EU emissions, has the longest way to go. Electricity accounts for only 1% of overall energy use in transport — mainly due to electric rail lines. And although we see interesting technology developments in aviation and maritime, the most realistic approach to reducing transport emissions is to electrify road transport. A massive shift to electric passenger cars will become easier as the total cost of ownership tips in favour of electric rather than combustion engine cars. But the shift will also rely on policy and public-private partnerships to ensure the roll-out of charging infrastructure in commercial and residential buildings. While it may seem overly ambitious to suggest that 75-100% of all passenger cars will be electric, there are already examples where uptake exceeds expectations. More than half of new passenger cars sold in Norway are hybrid or full-electric. Heavy duty road transport is also seeing rapid technological change and buses and medium size trucks will likely see electrification in the coming years.
Buildings are doing a little better. A good third of the energy used in buildings is already electric, although the share differs across Europe, but this needs to increase massively. Significant potential exists for the electrification of cooking as well as space and water heating. Many of the solutions exist, electric hobs, heat pumps and water heaters, and are effective and commercially competitive, but they need to be mainstreamed in new buildings and outdated technologies, such as domestic oil furnaces in older buildings, replaced. The increased use of electric solutions in buildings will also help create a more resilient power system. A good example is France, where eight million domestic electric water heaters can help shift a power demand of three gigawatts away from peak load hours to times when variable power production is available in ample amounts.
Decarbonising Europe’s industries will be a complex exercise as they are exposed to competition from outside the EU and their value chains differ greatly in terms of input, output and processes. But direct electrification will play a key role, for example, in decarbonising low and medium temperature processes. Moreover, indirect electrification, such as hydrogen made with carbon-free electricity, has significant potential to decarbonise heavy industrial processes.
Depending on the level of decarbonisation ambitions, our study finds that 40-60% of total final energy consumption needs to be electric by mid-century, up from just over 20% today. Is this a commercial pitch for massive load growth in the power sector? No, on the contrary. Total energy use will need to fall dramatically to reach emission reduction objectives. Electrification and efficiency are the winning combination because in many cases electrification yields energy savings. Whether it is heat pumps, electrically powered trains and cars, or new industrial technologies, electric solutions are often more efficient than their alternatives.
Electrification is an indispensable part of any ambitious decarbonisation strategy. We hope this will be duly reflected in the context of Europe’s long-term climate and energy strategy.
In June 2018, EU negotiators agreed on 2030 energy and climate targets. These include a commitment to reduce greenhouse gas emissions by 40% by this date, to have a minimum of 32% renewables in the EU energy mix and a 32.5% goal of energy efficiency savings.
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