Opinion - 17/December/2018

Working together for economic and climate goals

Power and heavy industry companies leading decarbonisation efforts will benefit the climate and boost their own businesses, argues Marion Labatut from Eurelecric, a European electricity industry federation

Hand-in-hand the power sector and heavy industry sectors in Europe can decarbonise and become global business and climate leaders, says Marion Labatut from Eurelectric, a European electricity industry federation

 

The latest report from the Intergovernmental Panel on Climate Change warned we have just over a decade to limit global warming to 1.5°C. The Emissions Gap Report 2018, released by the United Nations Environment Programme (UNEP) in December, showed greenhouse gas emissions reached a record high of 53.5 gigatonnes of carbon dioxide (CO2) equivalent in 2017. To change this trajectory, we need to act at multiple levels and build cross-sector synergies. The European power sector is committed to leading this transformation. With the right regulation and access to the necessary data, we will achieve carbon-neutrality well before 2050 and enable other industries to clean up their emissions.

Our study “Decarbonisation Pathways” developed with the support of consultants McKinsey investigates deep decarbonisation and electrification scenarios for the EU economy. It establishes that full decarbonisation of the power sector by 2045 is technically doable and can be achieved at lower costs than ever before thanks to massive decreases in the price of renewables and storage technologies. It also concludes that to reduce EU emissions by 95%, electricity should represent 60% of final energy consumption, compared to 22% today.

On 27 November 2018, Eurelectric hosted an event in Brussels, Belgium aimed at accelerating clean energy investments. It brought together heads of European utilities and high-level officials from the European Commission, the EU executive body. CEOs including Pekka Lundmark from the Finnish energy company Fortum, Darius Maikštėnas from Lietuvos energija, a Lithuanian state-owned energy company, Pat O’Doherty from ESB, an Irish corporation, and John Cooper of FuelsEurope, representing the EU refining industry, addressed the industrial and economic opportunities from decarbonising.

 

 

They agreed that Europe can achieve its climate and industrial growth ambitions by leading the energy transition and promoting its models and solutions in wider fora. “If in Europe we are proactive and embrace new business models and ecosystems, we can export them,” said Maikštėnas. “It is essential for us to lead the change and to be pioneers.” There was also general agreement that this deep transformation needs to be enabled by technological developments and digitalisation. This requires Europe to have the right frameworks and regulations. Access to data is paramount both for enabling utilities to use networks in an intelligent manner and for developing services through which consumers can use energy in a smarter way.

Costs are a top priority for policy makers and consumers. Eurelectric’s study shows that with average annual investments of €89-111 billion in generation and storage, the power sector can become fully carbon-neutral by 2045. Moreover, it can enable the decarbonisation of other sectors by providing them with clean electricity. “This can be done with adequate market design and cross-sector synergies,” said Fortum’s Lundmark. Integrated planning and policy coherence across sectors, effective market-based mechanisms and robust carbon pricing can minimise the costs of decarbonisation. These are necessary to “set the ground for emissions reductions and push the market to adapt”, he added.

Competitiveness is a key concern for energy intensive industries. Industrial sites need to invest heavily to change their processes, while being in a position to maintain an industrial base in Europe. “Sectors which were for a long time at odds need to work hand-in-hand to achieve decarbonisation,” said Cooper of Fuels Europe. Eurelectric’s study finds that synergies will emerge from parallel decarbonisation efforts. They will develop first thanks to direct electrification, but also through the deployment of electric fuels, such as hydrogen and power to gas, to decarbonise some industries. This would mean producing these fuels when renewable electricity is abundant and storing them in the existing gas infrastructure for future industrial use. This would bring additional seasonal flexibility and be one way in which sector coupling can add efficiency to the energy system.

Decarbonising our society also needs smarter and more resilient distribution grids, said O’Doherty of ESB. With over 80% of variable renewables connected at a distributed level by 2045, as set out by our study, and with the development of electric vehicles and active consumers, distribution system operators will be centre stage to accelerate electrification and enable the electricity system to be fully decarbonised.

For the power sector, Decarbonisation Pathways is more than a study. It is the expression of an unwavering commitment to fully decarbonise electricity and of the sector’s desire to show itself as a solution for carbon-intensive sectors. Clean electricity will be the backbone of a carbon-free European power system and lead the way to a decarbonised European society.

 


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