Electrification of the transport, buildings and industrial sectors
in Europe could slash greenhouse-gas emissions by 60% between 2020
and 2050, according to a new report published today by research
company BloombergNEF (BNEF). A revolution in the use of
energy by these three sectors is possible over the next 30 years,
bringing about sharp reductions in CO2 emissions. Written in
partnership with Eaton and Statkraft the report, Sector
Coupling in Europe: Powering...Request free trial
Electrification of the transport, buildings and industrial sectors
in Europe could slash greenhouse-gas emissions by 60% between 2020
and 2050, according to a new report published today by research
company BloombergNEF (BNEF).
A revolution in the use of energy by these
three sectors is possible over the next 30 years, bringing about
sharp reductions in CO2 emissions. Written in partnership with
Eaton and Statkraft the report, Sector Coupling in Europe:
Powering Decarbonization, outlines a plausible pathway of
electrification, taking account of current levels of policy
ambition in countries like the U.K. and
Germany.
Victoria Cuming, head of global policy
analysis for BNEF, commented: “Electrification, or ‘sector
coupling’ as it’s known in some countries, could make a huge
contribution to the achievement of governments’ emission-reduction
targets by exploiting the low-carbon transition already underway in
the power generation sector.”
Electrification could take place via a mix
of ‘direct’ and ‘indirect’ changes. ‘Direct’ would involve the
proliferation of electric vehicles in as much of the transport
sector as possible, and the spread of electric heating systems like
heat pumps in buildings and some parts of industry; and ‘indirect’
would involve a switch to ‘green hydrogen’ – produced by
electrolysis using renewable electricity – as a fuel to provide
heat for buildings and as many industrial processes as possible,
that otherwise would rely on fossil
fuels.
“However, action from policy makers will be
needed if these changes are to happen,” Cuming said. “Governments
should introduce incentives or requirements to cut emissions from
building heat, support demonstration projects for electrification,
and iron out barriers to the production of green hydrogen. They
should also consider how to engage energy consumers and civil
society as they have a crucial role to play in enabling
electrification of these new
sectors.”
Albert Cheung, head of analysis for BNEF,
added: “Electrifying other areas of the economy will have
significant repercussions for the power system. Policy makers will
have to support the reinforcement and extension of the grid to
handle higher power volumes and more renewables, and the deployment
of batteries and other sources of flexibility to balance the
system.”
The report estimates that the power system
could need 75% more generation capacity by 2050 compared with what
would be needed without the additional sector coupling, with
low-cost wind and solar plants comprising most of that. The power
system would also need to be more flexible due to the different
energy consumption patterns of heating and transport. At the same
time, the newly electrified sectors could create new sources of
this ‘flexibility’ – by being able to alter their consumption
patterns – provided the right policies and technologies are in
place.
Such an electrification pathway would
enable power (directly and indirectly) to account for up to 60% of
final energy demand by these sectors, compared to just 10% now.
That would still be far short of full decarbonization for those
sectors. That is due to the various hard-to-abate activities within
them – including aviation, shipping, long-haul road transport and
high-temperature industrial processes such as cement and steel – as
well as the long replacement cycles of some
assets.
To further reduce emissions to net-zero,
governments would need to introduce more ambitious policies
accelerating the ‘sector coupling’ pathway, and bring other
technologies to market such as carbon capture, use and storage
(CCUS). They would also have to address agriculture and land
use.
It will be important to meet the additional
power demand with clean power as much as feasible to maximize the
climate benefits of sector coupling. Cheung said: “It will be
crucial that governments and regulators adopt an electricity market
design that enables developers of wind and solar projects, and
those planning battery storage plants or demand response services,
to anticipate level of returns that justify their
investment.”
Henrik Sætness, SVP corporate
strategy and analysis at Statkraft said: “The report confirms
what electrification means for the decarbonisation of society and
the unparalleled role of renewable energy in the years to come.
Going forward, renewables can’t be part of the solution. They must
be the solution.”
Cyrille Brisson, vice president, sales,
service and marketing at Eaton EMEA commented: “This study
demonstrates the need for big changes to policy and market design,
in order to accelerate the energy transition and halt the
accumulation of greenhouse gases in the
atmosphere. While essential reform to grid
regulation has started to progress across Europe, we have far to go
if we are to replicate best practices and further encourage
innovation. This is particularly apparent when it comes to market
structures that incentivize the flexibility needed to address the
challenge of renewable
intermittency.”
In the report’s pathway, which assumes that
the above mentioned challenges are met, total emissions across
power, transport, buildings and industry fall by 68% from 2020 to
2050. This compares with a reduction of 60% if only considering
transport, buildings and industry.
Figure 1: Reduction in greenhouse-gas
emissions over 2020-2050 with sector coupling in a country like
U.K. or Germany
Source: BloombergNEF. Note: * Figure
assumes that all compatible boilers in buildings are fueled by
green gas or hydrogen.
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