Electrification - A Key Solution For A Decarbonised Europe

By Hans ten Berge, Secretary General, EURELECTRIC
Winter 2015

A common challenge facing industry, policymakers and customers in today's energy world is: how to cost-effectively decarbonise Europe. Heating and cooling in EU buildings and industries constitutes 50% of our energy consumption. Together with 32% for transport, they represent the largest shares of energy demand across Europe. Currently, 85% of heating and cooling is produced from fossil fuels. This means that there is a vast potential to both decarbonise and save fuel. While some options to this are widely known, such as electric vehicles (EVs), much more can already be done, especially if we look at the overall potential of electrification.

In considering the true value of electricity as a means to achieve a decarbonised European economy, we must be clear that no other current energy carrier can decarbonise to the same extent and scale as electricity. Decarbonising electricity generation will make a major contribution to meet Europe's climate change targets. With the power sector fully committed to reducing CO2 emissions by 80-95% by 2050, and an effective policy framework in place to ensure this goal, electricity is set to become the energy carrier of the future. Therefore, if used more widely, it also has the potential to decarbonise other sectors, which currently have no prospect of becoming fully sustainable.

Electrifying heating, cooling and transport with power from decarbonised sources reveals a wide range of benefits which are critical in the transition to a sustainable economy in Europe.

One of the key benefits of electrification is that it helps meet the world's energy needs with less carbon. Using electricity for local heating in buildings and cities would not only reduce CO2 emissions, but it would also cap the emissions of the heating sector by de facto bringing them under the EU Emissions Trading System.

Currently, there is widespread perception that improving energy efficiency implies reducing electricity consumption. However, recent technological developments have completely reshaped the comparative efficiency of electricity use versus the use of other energy vectors (e.g. gasoline, natural gas, oil). Therefore, the use of more electricity can actually result in increased energy efficiency. For example, changing an oil burner with a heat pump can, on average, save almost 50% of annual primary energy consumption. In road and rail transport, the numbers are just as impressive.

In urban areas in particular, electrification can also have significant environmental benefits. Electricity in transport and heating can reduce air pollution in our cities, especially when it comes to local pollutants such as particulates, NOx, SOx, VOCs and ozone. The use of electric buses, trains and light trains can drastically improve the air quality, traffic congestion and noise pollution. Beyond cities, electricity can also replace fossil fuels in small and medium enterprises (SMEs). This will allow concentrating energy related emissions to those remaining electricity producing plants with more efficient pollution abatement systems that will primarily be used as back-up for carbon-neutral generation. Therefore, switching from direct use of fossil fuels to electricity enables energy users to meet energy needs through zero emission energy (solar, wind, hydro, geothermal, nuclear etc.).

Since power can be produced from many different sources, electrification allows greater flexibility, and in return, this will further strengthen the security of supply. At the same time, electrifying final energy consumption could increase storage opportunities. The use of electric vehicle batteries or electric appliances (e.g. water heaters) as flexible demand and decentralised energy storage will allow higher renewable penetration and increase the reliability of electricity supply.

Finally, all the benefits mentioned above have direct positive impacts on the consumer. The use of electric vehicle batteries or electric appliances means that customers will no longer rely on fossil fuels and their volatile prices. Moreover, the development of demand response options for consumers make electric solutions more valuable compared to fossil fuelled alternatives. Electrification empowers the final consumers by giving them the opportunity to influence their bill and be in control of their consumption.

The good news is that the technologies enabling electrification are a reality. They already exist on the market or are getting ready for mass deployment (e.g. electric vehicles, heat pumps, smart technologies controlling energy consuming appliances, and direct heating based on low carbon generation). However, we must ensure that these technologies live up to their potential and help transform the energy system. While there have already been some positive policy signals, such as the strengthening of the EU Emissions Trading Scheme (EU ETS), much more progress is possible in the right policy landscape.

Despite policy developments, electrification and its direct and indirect benefits continue to suffer from a general lack of recognition or even a straight blockade of technologies involved. One major obstacle, which remains to be tackled, is related to the additional energy costs placed on electricity bills. These make electricity more expensive to customers compared to fossil fuel alternatives. It is therefore crucial to develop smarter financial instruments to increase private investment in new technologies that can replace old ones. Moreover, further factors enabling electrification, such as innovation and smart grids, need to be recognised so that new technologies can be pushed forward.

Without a doubt, the electrification of transport and heating is a very promising pathway. However, the policy obstacles indicated above need to be addressed as soon as possible. The choices we make today will determine whether we reap the potential benefits from electrification in 10 years, or whether we continue to consume large quantities of fossil fuels in our buildings and means of transport for another generation. If we are serious about decarbonisation, and the power sector is, unlocking electrification's potential will multiply its benefits for society and the environment. EURELECTRIC, sector association representing the common interests of the electricity industry at pan-European level, has made electrification a top priority in its agenda and will publish further reports supported by quantitative data.