The Electrification Alliance

Electricity for an Efficient and Decarbonised Europe

Electrification, the Net-Zero pathway away from fossil fuels

Source: POLITICO ARTICLE

Politico Studio discussed with Jean-Bernard Lévy, chairman and CEO of EDF, Francesco Starace, CEO of Enel, & Ignacio Galán, chairman and CEO of Iberdrola.

Electrification based on zero-carbon technologies and renewables is the solution for the total decarbonization of the European economy. This is the way to put an end to European dependency on fossil fuels from third countries as well as to build a stronger, more sustainable economy. The sector is fully prepared to be the main player in this transition.

The recent COP26 has underlined the social and political consensus to reach our climate goals but has also sent a message of urgency. This is the opportunity to build a stronger, more sustainable future. As companies, we are ready to do our part.

Europe’s current energy crisis stems from its dependence on fossil energy. If we had already reached the renewable energies (RES) targets set by the European Union for 2030, the impact of gas prices on electricity would be half of what it is now, and we would have been better equipped to protect consumers. This is why we are fully committed to the urgent need to accelerate development of renewable and zero-carbon energy sources. In fact, when taken together our companies plan to reach 275GW of renewable electricity by 2030.

We are fully committed to the urgent need to accelerate development of renewable and zero-carbon energy sources.

The European Green Deal’s significance is twofold. It will mitigate the impact of the climate crisis, making Europe the world’s first climate-neutral continent by 2050. But it also stands as the EU’s primary long-term growth strategy. Accelerating its implementation is a critical priority for all of us, and there are many benefits: a cleaner environment, more affordable energy, smarter transport, and job creation. This concerns the entire industry value chain, from manufacturing and construction to operation of renewable networks and digital jobs for smart grids, electromobility and digital appliances.

Let us be clear: renewable and zero-carbon electrification is the key solution for the full decarbonization of the European economy. This is the way to put an end to European dependency on fossil fuels from third countries and the sector is fully prepared to be a main player of a just transition.

We have all the tools required to accelerate the Green Deal’s implementation. Europe is home to a wealth of technological expertise that will support the continent’s climate neutrality goals, and the energy transition offers an opportunity to enhance our industrial leadership

At the policy level, the EU’s Fit for 55 policy package, together with the Recovery and Resilience packages submitted by member states, demonstrate the Union’s clear commitment to invest in a cleaner, more resilient, and more sustainable future. We need to build on this foundation with a radical transformation of how we produce, consume and transport energy. Ambitious climate, renewable and energy efficiency objectives for 2030 are a step in the right direction.

Ambitious climate, renewable and energy efficiency objectives for 2030 are a step in the right direction.

Pressing near-term concerns are looming large, but there are solutions to our current energy crisis as well. To cope with current and future price hikes caused by fossil fuel volatility and protect EU citizens from it, we must move away from our dependency on emitting commodities. Let us remember that the EU spends €175 billion per year on energy imports which are mainly fossil. We are not starting from scratch: two thirds of EU electricity was carbon free in 2020. To facilitate future investment decisions in zero-carbon electricity, which are capital intensive, the sector needs visibility via long-term market signals and instruments, including power purchase agreements, contracts for difference, and more volumes on forward markets instruments. A zero-carbon energy system ensures that electricity prices would be much more stable than they are now.

We are ready to do our part, invest massively, innovate, create jobs, but we also need a concrete, predictable regulatory framework. Market interventions can lead to exasperating problems in the short term and regulatory instability in the long-term. One of the biggest bottlenecks to renewable project deployment today is lengthy and complex permitting procedures. We strongly support the European Commission in its efforts to address this challenge, and likewise encourage EU and national lawmakers to do more, faster.

The grid will also be crucial for our decarbonized future and we need to strengthen interconnections across the EU and smart distribution grids. Estimates show that Europe must invest some €400 billion in electricity distribution grids by 2030. This spending will permit the integration of the majority of renewable projects on the continent, support the addition of 50 million to 70 million electric vehicles on the road. It will also support the creation of up to 620,000 jobs per year in distribution.

Zero-carbon and renewable, direct electrification is a “no regret” option. It is the most reliable and cost-efficient way to achieve this decarbonization for the benefit of the climate and citizens. Electrification of transport and buildings will be a game changer. The progressive process of deep electrification will ensure the most effective use of resources in these sectors. Electric vehicles are between three and five times more efficient than internal combustion engine vehicles. Heat pumps are four times less energy-intensive than gas boilers. Shifting from gas to electricity for heating will positively impact household and business expenses because heat pumps are inherently more efficient than any other heating device.

The remaining barriers must be lifted. In transport, for example, the shift to electromobility requires a much wider distribution of charging stations across Europe. The Commission plans to do this, but we must move faster, including with advanced technologies enabling the use of the battery for the grid..

Ensuring environmental costs are adequately reflected through taxation and carbon pricing are key instruments for the creation of a level playing field between energy carriers and the expansion of renewables overall. For instance, currently, EU household electricity prices bear 40 percent of taxes and charges unrelated to supply costs, while gas bills only bear 26 percent. In this context, subsidies and regulatory advantages for fossil fuels are beyond counterproductive and pose a direct threat to Europe’s green future.

Europe’s advantage is that its industry is extremely well-positioned in both the transport and building sectors, ensuring that the green transition will create a virtuous circle of investment, innovation, and local jobs. The European recovery plans are a historical opportunity to accelerate progress in these spheres.

We need to act now, and action starts with open, transparent, and fact-based debates on how to ensure Europeans have safe, clean, smart energy, supplied by European companies, and reliant on a European supply chain. This is the best way to lay the foundation for a sustainable and prosperous European economy. Together with the EU we are committed to it.

Jean-Bernard Lévy, Francesco Starace & Ignacio Galán support the Electrification Alliance. They will take part in a high-level debate during the digital event “ElectrifyNow: which role for electrification in the Green Deal?” on 17th November.