The progressive electrification of sectors such as heating, cooling and transport will bring tangible benefits for European society, economically and environmentally, argues Kristian Ruby

A key challenge for Europe today is how to decarbonize the economy.

As the European Union pursues its commitments to the Paris Agreement on climate change, cost-effective decarbonization is crucial if Europe is to remain competitive in the global marketplace.

With the 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 decentralized nature, as well as their high dependency on fossil fuels.

Currently, 85 per cent of heating and cooling is produced from fossil fuels. In transport, the share is even higher. This means that there is a vast potential to both decarbonize and save fuel in these sectors. While some options for this are widely known, such as electric vehicles (EVs), much more can already be done, especially if we consider the overall potential of electrification.

Carbon intensity

A recent Eurelectric report, A Bright Future for Europe, 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 demonstrating real achievements on the path towards decarbonization with huge investments in renewable energy. The policy reforms currently being discussed under the Clean Energy Package are set to accelerate the decarbonization of electricity further.

And, as electricity becomes increasingly decarbonized, 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 emissions. Using today’s average European electricity mix, an EV is responsible for less than 50 g CO2/km. This represents a fraction of the carbon emissions produced by even the most efficient conventional cars available on the market today, and it’s significantly lower than the average target under current regulation for all new cars of 95 g CO2/km by 2021.

In addition, the efficiencies delivered by an electric engine are three times that of an internal combustion engine due to lower heat losses during the energy conversion process.

Political incentives

But because of today’s technology-biased transport infrastructure, policy measures such as ambitious emission targets for cars and vans, separate zero-emission car targets and improved test cycles are needed. And, crucially, charging infrastructure requirements are necessary to ensure further deployment of EVs and make cities ready for a future where electro-mobility is the rule rather than the exception.

In the heating and cooling sector, the scope for further emission reductions is 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 ($49 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.

Cities with cleaner air

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. Last but not least, electrification is a prerequisite to harvest the full potential of the digital transformation, which is necessary to ensure future competitiveness of the broader European economy.

In short, the increased use of electricity in European society will add value to the everyday lives of European citizens and the European economy, while driving the pursuit of the EU’s decarbonization ambitions and its commitments to the Paris Climate Agreement. Policymakers should go ahead and take the necessary steps to leverage the power of electricity.

Kristian Ruby is Secretary General of Eurelectric.

Five steps to decarbonization

In its report, A Bright Future for Europe, Eurelectric presents five key proposals that aim to facilitate the electricity sector’s ability to be the key energy carrier for a decarbonized and competitive Europe:

1. Bringing down policy support costs in the electricity bill to reduce the pressure on electricity consumers who currently carry the bulk of decarbonization costs. Instead, decarbonization investment should be driven by market-based mechanisms such as the EU ETS. Sectors currently outside the EU ETS, such as buildings and transport, and energy carriers other than electricity should also make equitable financial contributions to decarbonization.

2. Strengthening the EU ETS by increasing the Linear Reduction Factor for the period post-2020 to at least 2.4 per cent, increasing the intake rate of the Market Stability Reserve (MSR) to 24 per cent per year from 2019 until at least 2023, and offering a mechanism to future-proof the MSR by lowering the applicable thresholds. At the same time, Eurelectric sees the necessity to mitigate increased costs for Member States with high carbon intensities and low GDP per capita ratios.

3. Advocating an energy efficiency policy at EU level which promotes innovation, allows the consumer to have active and positive involvement, and ensures savings come from carbon intensive sources.

4. Developing measures to capture energy carriers currently outside of the EU ETS so these also contribute to financing decarbonization. At the same time, market distortions from policy support schemes should be minimized.

5. Ensuring the market effectively values energy, flexibility and capacity. Market integration must be achieved and cross-border capacity must be used efficiently to fully integrate increased shares of renewables.