THE ENERGY INDUSTRY TIMES - JUNE 2017 Industry Perspective 13 Electrification: a winning strategy for Europe A key challenge in today’s energy world is how to cost-effectively decarbonise the European economy. As the European Union pursues its commitments to the Paris Agreement on climate change, the decarbonisation of the European electricity sector will be key. Cost-effective decarbonisation is crucial if Europe is to remain competitive in the global market place. With heating and cooling, and transport sectors still contributing around 66 per cent of Europe’s greenhouse gas emissions, these sectors pose a key challenge to unlocking Europe’s sustainability potential. This is particularly the case when we take into consideration their decentralised nature, as well as their high dependency on fossil fuels. Heating and cooling in European buildings and industries constitutes 50 per cent of our energy consumption. Together with the 32 per cent for transport, they represent the largest shares of energy demand across Europe. Currently, 85 per cent of heating and cooling is produced from fossil fuels. This means that there is a vast potential to both decarbonise and save fuel in these sectors. While some options to this are widely known, such as electric vehicles (EVs), much more can be done – especially if we consider the overall potential of electrification. ‘A Bright Future for Europe’, a report Eurelectric published recently, shows that the progressive electrification of sectors, such as transport and heating and cooling, will bring tangible benefits for European society, economically and environmentally, as well as in terms of benefits for consumers. The carbon intensity of electricity production in the EU has reduced by over 35 per cent since 1990, which is significantly quicker than all other major energy carriers. The sector is fully committed and is demonstrating real achievements on the path towards decarbonisation with huge investments in renewable energy. The policy reforms currently being discussed under the Clean Energy Package are set to accelerate the decarbonisation of electricity further. As electricity becomes increasingly decarbonised, it provides a key part of the solution to reduce greenhouse gas emissions in other sectors. In the transport sector, switching to electricity is already a no-regret option for reducing GHG emission today. When calculating the indirect GHG emissions related to the production of electricity, using today’s average European electricity mix, an EV requiring 10 kWh per 100 km is responsible for less than 50 gCO2/km. This represents a fraction of the carbon emissions produced by even the most efficient conventional cars available on the market today, and significantly lower than the average target under current regulation for all new cars of 95 gCO2/ km by 2021. In addition, the efficiencies delivered by an electric engine are three times that of an internal combustion engine (ICE) due to lower heat losses during the energy conversion process. But policy measures such as ambitious emission targets for cars and vans, separate zero-emission car targets, improved test cycles and charging infrastructure requirements are necessary to ensure emission reductions and further deployment of EVs. In the heating and cooling sector, the scope for further emission reductions can be huge, and so is the scope for economic benefits. The increased use of electricity in heating and cooling could open the door to energy import savings of around €45 billion per annum. In order to harvest the benefits, a level playing field between energy carriers is needed, however. The legislation must revise and differentiate between the primary energy factors for different energy sources. New and innovative finance instruments should be developed to accelerate deployment of heat pumps and similar technologies. Reducing the fossil fuels burnt in our cars and houses has many other advantages. In urban areas in particular, electrification can have significant environmental and health benefits. Electricity in transport and heating can reduce air pollution in cities. The use of electric buses, trains and light trains can drastically improve air quality, traffic congestion and noise pollution. But electrification offers much more than just downstream decarbonisation. It can improve efficiency, strengthen security of supply and empower Europe’s energy customers. The value proposition of electricity in European society today is therefore magnified by the fact that these sectors can benefit from the electricity sector’s clear commitment and trajectory towards carbon neutrality. With Europe pursuing an ambitious decarbonisation agenda, we must move towards a true valuation of electricity in achieving a competitive and decarbonised European economy. Using electricity in sectors such as transport and buildings will not only reduce GHG emissions. But it would effectively also mean that the emissions from these sectors are capped as they are de facto brought under the EU Emissions Trading System (EU ETS). Given that the power sector’s GHG emissions are capped under the EU ETS, any potential increase in electricity demand will come at a net zero increase in overall emissions. What does this mean in practice? An increase in EV use across Europe will lead to an increase in electricity demand; however, no additional carbon will be emitted due to the emissions from the electricity sector being capped under the EU ETS. This will effectively result in a reduction in actual GHG emissions of 100 per cent for every internal combustion engine that is replaced by an EV. To make this happen, significant investment in renewables and other low carbon generation will continue to be necessary in coming years. The most effective way towards a low-carbon European economy is through a clear, predictable carbon price signal that will allow industry to invest in an efficient and sustainable manner. This is why we have consistently advocated for a strong EU ETS. We are convinced that this is the best way to provide affordable, reliable and sustainable electricity to the EU economy and to achieve Europe’s decarbonisation objectives in a costefficient manner. Only the combination of an effectively reformed EU ETS and an improved EU electricity market design can lead to proper price signals from the relevant markets to drive investments in mature low carbon technologies. When considering the current reform of the EU ETS and the proposals tabled in the Clean Energy Package, we stress the importance of strengthening the ETS in the current reform to address the huge oversupply of allowances that has depressed the carbon price for so many years and has hindered the ETS from fulfilling its potential. Electricity from carbon-neutral generation is the cleanest energy carrier, making electricity the main vector for a decarbonised energy future in Europe. Electrification is the key vehicle for a decarbonised, competitive and energy independent Europe. It is a winning strategy that will add value to the everyday lives of European citizens. At the same time it will support the European economy, whilst driving the pursuit of the EU’s decarbonisation ambitions and its commitments to the Paris Climate Agreement. Kristian Ruby is Secretary General of Eurelectric. To read ‘A Bright Future for Europe’ , visit: http://www.eurelectric. org/media/318404/electrification_ report_-_a_bright_future_ for_europe-2017-030-0291-01-e.pdf. A recent report published by Eurelectric shows that the progressive electrification of sectors such as transport, heating and cooling, will bring tangible benefits for European society. Kristian Ruby Ruby: As electricity becomes increasingly decarbonised, it provides a key part of the solution to reducing greenhouse gas emissions in other sectors From commitment to results: observing electricity’s decarbonisation journey
Energy Industry Times June 2017
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