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How can the EU’s energy system best contribute to climate neutrality?

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As European energy and environment ministers meet this week, E3G suggests how Europe’s energy system can best contribute to achieving climate neutrality by 2050. 

The European Commission has demonstrated that moving to net zero emissions by 2050 is the best way to protect Europeans and their prosperity. It will lead to positive economic impacts, bring substantial health benefits to European citizens and underpin Europe’s industrial competitiveness. A European climate neutrality goal by 2050 has received broad support from cities and regions, investors, businesses, utilities and civil society, as well as 10 countries representing half of the EU’s population. 

What main structural changes does the energy system need to undergo and what elements of the toolbox are the most crucial?  

Reaching climate neutrality by 2050 will require deep and rapid decarbonisation of the energy system. Given the large risks and uncertainties regarding the potential for deployment at scale of nuclear, biofuels, hydrogen and carbon capture and storage, the ‘heavy lifting’ of decarbonisation will rely on the deployment of renewable energy sources and the electrification of the transport, heating and cooling sectors. This will require three major changes in the governance and regulation of the energy system: 

  • Adopt a ‘whole systems’ approach to planning infrastructure, based on technology choices consistent with climate neutrality. It will avoid spending money on assets that will not be needed in a decarbonised energy system and ensure decisions are made towards accommodating high proportions of renewable power generation, meeting the charging requirements of electric vehicles, and delivering electric heating and cooling. The first necessary step will be to reassess Europe’s energy infrastructure priorities, the latest assessment dating back 2011, in order to integrate new objectives and innovative technologies.  

  • Enhance consumer participation. There must be a strong consumer focus that ensures buildings are upgraded to be smart, efficient, and low carbon. Consumers must want to make the necessary changes on the basis that it will make their lives better and this will require changes in the way choices are presented.  

  • Share resources across borders. The key security of supply challenge will evolve from ensuring access to primary energy resources to the real-time balance of electricity supply and demand. This will involve much greater sharing of resources across national borders and the active operation of grids at the local level. The recently agreed Clean Energy for All Europeans did not fully address this issue and a new framework will need to be developed to provide national governments with the necessary assurance that security of supply is being maintained under these circumstances. 

How do new technology solutions such as hydrogen, power-to-gas, storage or biomass contribute to the transition towards a low carbon economy?  

For most of the energy system, technology solutions for full decarbonisation are readily available: renewable electricity, district heating or electrification of heat and passenger transport. 

Conversely, new technology solutions are still needed to decarbonise some heavy industries or heavy-duty transport and to provide seasonal balancing in the energy system. The rapid testing and upscaling of such innovative solutions are necessary to help Europe achieve its long term and interim climate targets to 2030. 

However, all new technology solutions must be deployed with a view to achieving full decarbonisation before 2050. For instance, each of the potential options for gas debated in the Commission’s strategy, such as natural gas, hydrogen from electrolysis and steam methane reforming or biogas, come with different climate or infrastructure implications. A clear taxonomy for these new forms of gas will help decision-makers and investors assess future value and risks, for instance:  

  • Upscaling of climate neutral hydrogen (i.e. through electrolysis) and biogas might face significant supply-side limitations – some estimates see a maximum potential of half of that used in the Commission’s vision (cf. Gas4Climate, ICCT). As such their deployment needs to be prioritised in the hard-to-decarbonise sectors. 

  • Continuing to rely on hydrogen from fossil gas for the transition will require progress in two areas that have been lagging behind expectations: the deployment of carbon capture and storage and methane abatement in the gas industry. Articulating the uncertainties and proposing ways to monitor progress will help to focus research and development efforts and adapt strategies if progress continues to lag behind. 

For more information on this, please consult our report “Renewable and decarbonised gas: options for a zero-emissions society”. 

How would the pathway to a low carbon society be best implemented for both EU citizens and regions? How do the National Energy and Climate Plans (NECPs) address this question? 

The NECPs are central to achieving the clean energy goals the EU has set itself for 2030. They also provide an opportunity for Member States to engage their citizens in a process of just transition, active participation and consultation. We have identified a number of factors that are crucial for a successful process of just transition. In order for a transition to be fair we recommend the following:

  • The plans must be flexible while giving a clear sense of medium and long-term direction to give planning certainty. This means the Commission must encourage member states to update the NECPs to align with any update of the 2030 targets in line with a trajectory to net zero well before 2050. 

  • The Commission and national governments need to consider the needs of workers in sectors that will be phased out entirely (coal, oil and natural gas), sectors that will need to adopt new technologies and business models (e.g energy, manufacturing) as well as those people already affected by climate change across the world. In support of this, the Commission should make the development of an industrial strategy for decarbonisation a priority. 

  • The Commission should map transition trajectories and support regions and Member States in doing skill audits and understanding the risks from climate impacts.  

For more information on this, please consult our briefing “The EU long-term strategy as an opportunity for just transition: five elements of success”.