Towards net-zero emissions: Which role for Wind-to-X?
Europe has set out to become the first climate neutral continent by 2050. While this objective is necessary in the face of global warming and international climate agreements, it is nevertheless highly ambitious. Climate neutrality means the con- version of all energy uses from fossil fuels to electricity generated by renewable energy sources, mainly wind and solar. Today the energy system is responsible for more than 75% of greenhouse gas emissions, calling for new technologies and a change in the way we produce and consume energy. What’s the role of wind energy in this? How can wind-to- x technologies contribute to the system integration of renewable energy sources?
The UK’s Daily Telegraph recently published an article with the headline “Electrify the hell out of everything”. While the phrasing might seem absurd, the essence of the headline is more than accurate. These simple six words illustrate several things. Firstly, direct electrification is the fastest and most efficient form of using renewable electricity. Secondly, direct electrification will deliver the bulk of decarbonization. Thirdly, there are very few limits to electrification. With battery storage technologies falling in costs and increasing in scale, many sectors such as power generation, light-duty transport, rail, pulp and paper, aluminium, buildings, and agriculture will be electrified with renewable electricity. And finally, the blunt phrasing illustrates that decarbonisation by 2050 requires determination and endurance, radically rebuilding our economies in accordance with the EU Green Deal and phasing-out fossil technologies. In some cases, against the resistance of European leaders and established interests.
Today wind is 15% of Europe’s electricity. It is expected to grow up to 50% by 2050. At the same time, the share of electricity in the energy mix will increase from 24% today to over 50% in 2050.
But the Telegraph headline misses one important point. Even in the wildest energy transition phantasies electrify-all strategies do not work. We cannot electrify the hell out of everything, for the so called harder-to-abate sectors, like heavy industry (cement, steel, and chemicals), heavy-duty road transport or large parts of aviation and shipping we need other solutions.
Renewable gases as well as gases or liquid fuels produced from renewable electricity, are key to decarbonising these harder-to-abate energy uses. They will also play an important role in storing electricity for times without wind and sun, creating a more flexible energy system. It remains crucial that those gases are produced from renewable electricity and without upstream greenhouse gas emissions or potentially dangerous carbon capture technologies. Today, over 95% of hydrogen production is fossil-fuel based. Only around 4% of global hydrogen supply is produced via electrolysis. By 2050 100% of hydrogen produced needs to be renewable hydrogen.
This poses a major challenge but also offers huge chances for the European economies. The EU Commission has understood the potential of renewable hydrogen in delivering a green recovery, creating future-proof jobs and tapping international markets for green tech. Hydrogen plays an important role in the EU Industrial Strategy and the Recovery Strategy. The European Hydrogen Strategy presented in July will further strengthen the role of renewable hydrogen. The EU aims to make renewable hydrogen cost competitive with fossil-based hydrogen within the next few years and start a massive scale-up of electrolysis capacities from 2024 onwards.
Germany has been the first member state to present a hydrogen strategy. They want to make hydrogen produced from offshore wind energy a centrepiece of their upcoming EU Council Presidency.
As WindEurope we believe that Europe can become a technology leader for renewable hydrogen, if we get the policies right. Economies of scale and efficiency improvements will reduce costs. In parallel, the EU must tackle main drivers of the additional costs. These are of regulatory nature in the use of electricity, which represents 65-80% of the operational costs of electrolysers. Tariffs and levies on electricity account for 30% on average of the total electricity bill across the EU.
The next package of legislative proposals for the gas sector should avoid locking-in Europe with fossil gas but rather create the conditions for zero-carbon gases to be technical and commercially viable. Alongside the right definition and taxonomy for renewable hydrogen, an enhanced traceability through Guarantees of Origin and further investments in European infrastructure are necessary. While there is room for the optimisation of the existing power grid, the EU and Member States should step up the grid build out significantly.
Finally, any ambitious strategy for wind-to-x technologies will fail without a continuous and predictable expansion of wind energy capacities in Europe. According to the EU Com– mission’s scenarios, wind energy needs to increase from 200 GW today to 1200 GW in 2050, with onshore wind remaining the bulk of the capacity but offshore wind accelerating rapidly. To deliver on this promise, Europe needs to simplify the permitting of new renewables and ensure a revenue base for them that minimising financing costs. Europe also need to continue to expand and upgrade its electricity transmission and distribution networks. The National Energy and Climate Plans have been a good starting point. They offer visibility for new installations up to 2030.