by Sonja van Renssen

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As the European Commission prepares a new EU 2050 climate and energy strategy for late November, organisations in Brussels are putting forward their own ideas on what this should look like. A major analysis by the Institute for European Studies at the Vrije Universiteit Brussel – carried out on behalf of 11 energy-intensive industries – predicts a tripling in demand for low-carbon electricity and warns that the success of “green hydrogen” will depend on the availability of “competitively priced, abundant and reliable low-CO2 electricity”. The challenges of creating such a resource are formidable, however. Other groups still look to carbon capture and storage/use (CCUS) for salvation.

This article discusses the results of a number of new reports and papers showing roads to a net zero emissions energy system in 2050: from the Institute for European Studies, Eurelectric, Eurogas, Ecofys, The European Climate Foundation, BP and the World Energy Council Germany.

One report that is doing the rounds at the EU institutions this autumn is a study carried out by the Institute for European Studies (IES) at the Vrije Universiteit Brussel this summer. It was commissioned by 11 European energy-intensive industries and in effect forms their contribution to a new EU 2050 climate and energy strategy. The Commission is preparing this strategy for delivery at the end of November, ahead of the next round of UN climate talks in Katowice, Poland (COP24) in the first half of December.

The IES report, which was first published at the end of September, clearly points out the central role of electricity in the future energy system. This is enhanced not diminished by all the recent hype about hydrogen in the EU capital. It concludes that European energy-intensive industries are likely to triple their electricity demand as they start large-scale decarbonisation, especially through use of hydrogen as a feedstock, carbon capture and storage (CCS) and the production of fuels using electricity (power-to-X).

“Energy-intensive industries will become electro-intensive industries,” Tomas Wyns, the study’s lead author, told Energy Post. The researchers estimate that energy-intensive industries will use 2980-4430 TWh of electricity in future, up from 500-1000 TWh today. That makes “competitively priced, abundant and reliable low-CO2 electricity… one of the most important framework conditions for the transition to a low-CO2 industry in Europe”.

A lot of power

The IES study stresses that energy-intensive industries are “vital to enable a carbon neutral Europe”. They sit “at the forefront of low-carbon solutions” and “form the foundations of the European economy”. This is because they are an integral part of material value chains that produce everything from wind turbines to electric batteries. Energy-intensive industries’ emissions have come down over time – 36% since 1990, the report says – but clearly they will need to come down further if Europe wants to reduce its emissions to net zero.

The researchers have analysed more than 80 low-carbon technology options across all energy-intensive industries. What’s striking in the list of main options applicable to most industries, is that nearly all of them require “high” or “higher” electricity use than today. That’s true for the electrification of heat and processes, but equally true for use of “green” hydrogen (produced via electrolysis), biomass and carbon capture and use or storage (CCUS) or for example to create synthetic fuels (Powerto-X).

It is this huge extra demand for electricity that leaves some skeptical of Brussel’s latest hype: decarbonising gas via hydrogen or hydrogen-based synthetic fuels. “This additional demand will increase the challenge of greening current power demand,” the IES researchers warn. An ever greater share of renewables in the power system is already bringing more and more variability – and redispatch costs.

A la renewables

That’s not stopping the green gas lobby. The studies on sector coupling – or the use of power in heating and cooling, and transport, for example through “green” hydrogen production – are piling up.

We reported on a new PtX study by UK-based consultancy Frontier Economics, conducted on behalf of the World Energy Council Germany, last week. On 24 October, it was the turn of Netherlands-based consultancy Ecofys, who carried out a meta-analysis of ten existing power-to-gas studies on behalf of the German Association of Gas and Water (DVGW). It too concluded that power-to-gas makes sense for Germany to achieve its climate targets in the most cost-effective way – the question is about when and in what form. The European Commission is carrying out its own study, with a mid-term report due in November.

These reports underpin a new lobby effort by the European gas industry for public support. A Gas for Climate consortium led by gas network operators recently put out a call for a 10% target and renewables-style subsidies for green gas for 2030. They hope to get these provisions into an EU gas market reform tentatively planned for 2020. As input to the same reform, Eurogas, representing the European gas wholesale, retail and distribution sectors, issued a discussion paper on 22 October with policy asks for “natural, renewable and decarbonised gas”.

Eurogas invites the Commission to develop “a vision on ‘sector integration’”. It also proposes a “binding EU target for renewable and decarbonised gases combined with a European blueprint for guarantees of origin as well as a European framework for support schemes that can help scale up the production and economics of decarbonised and renewable gas.”

Note here the distinction between “renewable” and “decarbonised”. The former encompasses biogas/biomethane and PtX; the latter is CO2-neutral gas produced from steam reforming of natural gas with CCUS. Several speakers at the launch of the Frontier Economics study in Berlin – including the study’s lead author and Jörg Bergmann, Chairman of the Board of Management at gas transmission company Open Grid Europe – argue that this so-called “blue” hydrogen could aid the development of a global PtX market.

A representative from the Norwegian Embassy in Berlin told the conference that Norway (labelled a “frontrunner” in the WEC study) is setting its sights above all on decarbonised gas because it has so far only exploited about one-third of its natural gas reserves.

Back to CCS

CCUS appears to be getting a new lease of life in Brussels, in part in the context of “blue” hydrogen production, in part because, at least on paper, it is still essential to the cost-effective decarbonisation of the European economy. MEPs rejected a controversial recital that would have dismissed CCS as a mitigation technology in a vote last Thursday on a position for COP24. NGO Bellona Europa, which has a long history of campaigning in favour of CCS, heralded this as recognition of “the vital role that CCS technologies will have to play in reducing industrial emissions”.

Few still seem to believe in CCS as a large-scale solution to decarbonise the power sector (vs industry), however. Which is why it was surprising to read in BP’s 2018 Technology Outlook, presented in Brussels last week, that for it, decarbonised gas still means “capturing the CO2 created by the combustion of gas or other fuels at power stations and elsewhere”. It believes that CCUS will account for “a significant share of power generation in North America and Europe” by 2050. The Outlook was originally unveiled in London back in March – see my colleague Karel Beckman’s analysis of it at the time here.

BP presents decarbonised gas as one of five areas in which it believes that technology can be a real game-changer. The link to the power sector probably stems from BP’s broader message that gas is still the best option to back-up renewables. The Outlook is rather neutral on hydrogen, citing the need for costs to come down substantially and upgrades to existing gas infrastructure. In a section on storage, it focuses above all on batteries. Presenting the Outlook in Brussels however, BP’s Head of Technology David Eyton suggested that CCU/S could be more important in hydrogen than power production in future.

Going green

Whether CCUS, green hydrogen or direct electrification, all of energy-intensive industries’ long-term decarbonisation options need a big increase in power. No wonder that Marco Mensink, Director-General for the European Chemical Industry Council (CEFIC), suggested that Europe should pursue cheap, abundant, zero-carbon electricity as its very own “shale gas” at an event back in July.

At that event, Eurelectric, representing European electricity companies, presented a study on how electrification could contribute to decarbonisation. It calculates that final demand by industry could reach almost the same level as the current EU economy-wide final demand for electricity. It would also represent half (3000 TWh) of final EU electricity consumption in 2050, under a 95% emissions reductions scenario. This would make industry by far the largest final electricity consumer in the EU.