The Energy Transition: Europe
Digitization, decarbonization and decentralization are the trio forces changing the world’s energy landscape. The energy champions of the future will be countries with deliberate strategies to not only conform to the dictates of these forces but lead the change through policy actions, investment in research and development, innovation and citizen engagement.
The central grid electricity system of about 140 years, however robust has obvious limitations in the light of the current realities of decentralization, connected everything, changing technologies and net-zero pursuits. Besides the heavy investments required to modernize the grid, grid electricity is fast becoming a stop-gap as individuals and businesses generate their electricity using smaller cost-competitive distributed units like co-generation plants or renewable energy sources like photovoltaic panels and wind mills.
Emerging economies in Africa and South East Asia with weak electrical grids and abundant alternative energy resources are best positioned to enjoy the gains of this radical shift if appropriate and timely actions are taken by their leaders. Think of the mobile phone revolution in Africa decades ago.
To meet up with the climate goals committed by most countries at the COP 21 Paris Agreement, there is an urgent need for governments at different levels to intensify efforts in exploring low carbon pathways to economic and sustainable development. Focus here must be on long term strategic plans without neglecting short-term initiatives.
The Climate Goal
To limit the risks and impacts of climate change, The 2015 Paris Agreement aims at keeping the increase in global average temperature to well below 2 °C above pre-industrial levels; and to pursue efforts to limit the increase to 1.5 °C. However, going by the 2018 IPPC Report report, we do not seem to be on the path to achieving this target. Our climate is already 1 degree centigrade warmer and we are likely to reach 1.5 degree centigrade by 2030, and 3 degree centigrade by 2100 if immediate and drastic actions are not taken. By the way, the report is not all gloom. It established a positive relationship between sustainable economic growth and limiting the global warming to 1.5 degree centigrade.
To avoid the impending climate catastrophe by keeping global temperatures from rising more than 2 degree centigrade and limit global GHG emissions to zero by 2100, we must collectively change the way we produce and consume energy. While the goal is largely the same, regions of the world will take different approaches that play into their competitive advantages and suit their peculiar situations. However, given the configuration of the world’s interdependent economy, climate focused decisions made in North America and Europe could have far reaching consequences for far away nations in the Middle East, China and Africa.
Europe In Transition
In line with the Paris agreement, the EU targets to be climate-neutral by 2050 — an economy with net zero greenhouse gas emissions. The European Green Deal, a set of policy initiatives targeted at making Europe the first climate neutral continent is a mechanism to achieve this goal. This strategy which entails the transformation and modernization of the key elements of the European economy is indeed a great DEAL.
Europe has cut emissions by 23% while the economy grew by 61% between 1990 and 2018. However, by 2050, only 60% of greenhouse gas emissions would have been cut if no disruptive changes are introduced. The green deal, with action plans and clear targets represents that impetus needed to achieve climate neutrality by 2050. The commission has committed to a budget of 1 trillion euros over the next ten years to realize this vision. This is grand and ambitious!
In March 2020, the EU proposed the EU climate law — which aims to enshrine in legislation a target of reaching net-zero emissions by 2050 and making it irreversible for member states. The implication is that actions that go against the very tenets of the legislation can be taken through the judicial system. This is bold!
The EU Hydrogen Strategy
According to the Hydrogen Roadmap Europe: A sustainable pathway for the European Energy Transition a study by FCH JU, Hydrogen could account for 24% of final energy demand, creating 5.4m jobs by 2050. It posits that the key segments of the economy such as gas grid, transport (especially heavy-duty vehicles), industrial processes requiring high grade heat and hydrogen feed stock could be decarbonized at scale using Hydrogen. In addition, it makes the large-scale integration of intermittent renewables possible by enabling conversion and storage of energy as a renewable gas.
On July 8, 2020, the European Commission unveiled the EU Hydrogen strategy, and launched the European Clean Hydrogen Alliance to deliver on it. Hydrogen has been identified as a key element in decarbonizing hard-to electrify segments of the economy such as transport, industry, and buildings at scale. The priority here is to support the development of Green Hydrogen (Hydrogen produced with renewable electricity like wind and solar) while utilizing low-carbon hydrogen in the short to medium term.
In a phased manner, the strategy sets ambitious targets for the production of renewable hydrogen in the EU from 2020 to 2050.
- 2020–2024: Production and Installation of at least 6GW electrolysers and one million tons of renewable hydrogen in the EU from the current 1GW existing electrolyser capacity.
- 2024–2030: Installation of at least 40GW electrolysers with 10 million tons of renewable hydrogen in the EU
- 2030–2050: Renewable Hydrogen would reach maturity and integrated across all the hard-to-decarbonize segments of the economy
Certainly, the future is ecstatic, green and hydrogen! A supper connected world powered by climate-positive energy, built on innovation, without hindering accelerated sustainable economic development.
