Decarbonising Europe’s economy means replacing fossil fuels by renewables wherever possible. And that implies getting much more renewable electricity into heating and transport, writes Giles Dickson.
Giles Dickson is CEO of WindEurope, a trade association.
EU leaders asked the European Commission earlier this year to update the EU’s 2050 climate strategy. The current version, which dates back to before COP21 in Paris, says the EU should cut greenhouse gas emissions by 80% in 2050. We need to come to COP24 in Katowice with a credible strategy consistent with keeping temperature rises well below two degrees.
Decarbonising Europe’s economy means replacing fossil fuels by renewables wherever possible. By electrifying the most polluting energy use in other sectors Europe can reap the benefits of its renewables success story.
Renewables now account for 30% of Europe’s power needs and already offer the lowest Levelised Cost of Energy (LCOE). Their share is set to grow as it gets easier and cheaper to integrate them into the system.
According to the International Energy Agency, wind will be the number one source of electricity soon after 2030, providing more than 30% of Europe’s electricity. But that’s only part of the story: electricity is just 24% of the final energy needed by Europe’s economy.
Political momentum is now starting to grow for an EU target of net-zero emissions in 2050 in the new strategy. To do this we’ll need to electrify heating and transport, where the share of renewables is just 18% and 6% respectively. If we’re serious about decarbonisation, changing that has to be our number one priority.
The societal benefits of doing this extend way beyond the obvious CO2 emissions reductions. Displacing fossil fuels on such a scale would also reduce other pollutants emissions. The health-related costs of poor air quality are estimated at 3-9% of Europe’s GDP.
It would also reduce energy consumption. The efficiency of electric appliances today such as heat pumps or electric vehicles are busting the myth that ‘onsite’ fossil fuels appliances are more efficient than ‘off-site’ electricity supply. Battery electric vehicles have a conversion efficiency of 80-90% (from tank to wheel) compared to internal combustion engines’ average of 20-30%. Meanwhile heat pumps can heat space and water with a co-efficient of performance of 3-4 compared to 40-80% efficiency for a traditional gas boiler. It will also strengthen Europe’s energy security. The EU currently imports 54% of the energy it consumes at a cost of more than €1bn per day.
As Europe’s energy mix evolves, energy taxation needs to evolve with it. As long as electricity is taxed more than gas we will struggle to achieve full decarbonisation. Denmark, for example, taxes electricity at 0.195 c€/kWh compared to 0.062 c€/kWh for gas. We need to remove unnecessary taxes and levies from electricity bills, which make up about 30% of the final price paid by consumers. This needs to go in parallel with the phase-out of fossil fuel subsidies and tax exemptions. G20 nations still provide four times more public financing to fossil fuels than to renewable energy.
This will also mean significant infrastructure investment. We’ll need more grid interconnectors (onshore and offshore) and charging infrastructure for electric vehicles. ‘Green’ hydrogen from renewables-based electrolysis can reduce CO2 emissions in many industrial processes. For that we’ll need investments in electrolysers and the retrofitting of industrial sites.
This is a huge challenge, but it’s also a remarkable opportunity for the European economy. With a clear choice for a renewables-based electrification, Europe holds the key to a successful decarbonisation strategy. And it means we keep an edge in key climate mitigation technologies namely wind energy which employs 260,000 people around Europe.
The socio-economic benefits of decarbonising Europe’s economy are vast. To help unleash these benefits though, we’ll need the right policies and investments to make it happen. This means displacing polluting fossil fuels and getting much more renewable electricity into heating and transport.