BRUSSELS INSIDER #2 - July 10, 2018
Electric planes, behavioural change, radical industrial reform: net zero emissions are tough, warns Eurelectric
by Sonja van Renssen
Eurelectric has published its own 2050 decarbonisation scenarios, with a focus on the role of electrification. At a debate in Brussels to discuss these, stakeholders including the European Commission were reminded of just how challenging a 95% emission reduction will be (especially in transport), the indispensable role of energy efficiency, and why energy-intensives need cheap, abundant, zero-carbon power.
The European Commission is not the only one in Brussels working on a mid-century climate and energy strategy.Fuels Europe published a “Vision 2050” in April. The European Chemical Industry Council (Cefic) is working on a strategy for next March. The European Climate Foundation (ECF) launched an “Industrial Transformation 2050” project as part of a new “Net Zero Initiative” in late June. And Member States have to draw up National Climate and Energy Action Plans for 2030 and 2050 under a new governance regulation agreed just a few weeks ago.
Eurelectric, representing the European power sector, has also already done (part of) the job. On 4 July, it hosted a debate in Brussels on long-term decarbonisation scenarios for Europe. The starting point was a new analysis it prepared with McKinsey looking at the role of electrification. This first analysis will be followed by a second analysis – looking at how the European power sector might reach net zero emissions “well before” 2050, as per its own Vision from last December – in the autumn. The second part is clearly crucial since the electrification equals decarbonisation mantra only works if that electricity is ultimately fully carbon neutral.
For now, Eurelectric has assumed that the European power sector decarbonises “in linear fashion”, Secretary General Kristian Ruby told the 4 July meeting. This is not incidentally through negative emissions, such as offsets or CCS, which Ruby said they have “not factored in too much”.The meeting brought together Marco Mensink, Director General of the European Chemical Industry Council (Cefic), Wendel Trio, Director at Climate Action Network (CAN) Europe, and Tom van Ierland (European Commission, DG Clima) with Ruby himself. It came up with some interesting messages. In part these came from Eurelectric/McKinsey’s analysis, in part from the debate that followed.
1. There is an exponential, not linear, increase in effort required between 80%, 90% and 95% emissions cuts. The changes required for 95% are huge – and still not enough for 1.5 degrees.
The jump from 80% to 90% to 95% requires a halving of absolute emissions every time, the Eurelectric analysis points out. Note that this is restricted to energy-related emissions (which together make up about three-quarters of Europe’s total emissions). Another way of putting it: so far Europe has delivered about a 1% emission reduction per year. In future, that will have to be 4%, 6% or 8% a year. For a 95% emission reduction, which is closest to the “net zero” goal that the European Commission is talking about, you are looking at electric planes, serious behavioural change and a radically different industrial landscape.
2. Energy efficiency is indispensable to high electrification rates. It is in part product of, in part facilitator of electrification.
Eurelectric has not been a defender of ambition on energy efficiency, but the new analysis makes clear that this is central to a higher share of electrification. “By definition, an electrification strategy, is also an energy efficiency strategy,” Ruby said. The scenarios depend on a major drop in final energy demand (0.6-1.3% per year) alongside major growth in electricity consumption (1-1.5% per year) for 38%, 48% or 60% electrification respectively, for an 80%, 90% or 95% emissions cut in 2050. Electrification itself can deliver about a third of the necessary annual energy savings. It’s delivering the rest that will be tough. Ruby said that none of the climate and energy legislation negotiated in the past few years puts us on track to net zero emissions by 2050.
3. Transport will make or break the electrification story: even for an 80% emissions cut, nearly a third of all transport is electrified in 2050. For a 95% cut, virtually every single passenger car on Europe’s roads is electric.
The power sector’s biggest hopes rest on transport. The total EU economy may already be electrified at 22%, but that average includes just 1% for transport. That 1% needs to jump to 29%, 43% or 63% for the three 2050 scenarios respectively. And those figures include all transport, i.e. ships and planes as well as road traffic. It’s a gargantuan challenge. The only way passenger cars can reach Eurelectric’s projection of 96% electrification in a 95% emissions cut scenario, is because the total vehicle fleet is 136 million cars, down from 256 million today. Will that happen? Aside from direct electrification, Eurelectric’s analysis projects that half of the future’s carbon-neutral fuels (think power-to-X but also biofuels) will be produced using electricity.
4. The electrification potential in industry (think steel, cement, chemicals) may well be greater than the maximum 50% assumed in the Eurelectric/McKinsey study. Especially with the advent of “green” gas.
Mensink, Trio and Van Ierland all suggested that energy-intensive industries could see electrification rates above the 50% maximum in Eurelectric’s 95% emission reduction scenario. Mensink suggested that abundant, cheap, zero-carbon electricity could be Europe’s “shale gas” for the chemicals sector i.e. stimulate industrial investments on European soil. He foresees closer cooperation among sectors such as steel, chemicals and refining within a hybrid energy system based on “molecules” (gas/hydrogen) flowing alongside electricity. His biggest fear is that the Commission’s competition department will shut down new ventures or make it difficult to manage depreciated assets due to its state aid rules.
The Commission seems happy at this stage to collect masses of stakeholder input, in theory all of it feeding into its own work on a new 2050 climate and energy strategy. It is working on a grand vision. But already amongst stakeholders there is some worry that in the end, they will be left to figure out the “how”.