Electrification and it’s starring role in a zero-carbon economy


The Energy Transitions Commission (ETC) released two high profile reports last month that espoused the roles that electrification and hydrogen will play in the drive to a zero-carbon economy. Mark Venables spoke to ETC director Faustine Delasalle for her thoughts on the progress to date and challenges ahead.

Plotting the path to a net zero future, The Energy Transitions Commission (ETC), is a coalition of more than 45 leaders from global energy producers, energy industries, financial institutions, and environmental advocates. The commission was created five years ago by a group of corporate leaders who wanted to collaborate and share their perspectives on how to reach low carbon energy systems.

“Over time, we have shifted to net-zero carbon energy systems by mid-century, and it’s a group that has been expanding over time that has ramped up its public presence in the past few years,” Faustine Delasalle, director, ETC, says. “At this point, the commission brings together almost 50 leaders from across the energy landscape, with a very good mix of energy suppliers, big energy-intensive industries, finance players, and a few NGOs, all on a global scale. It was historically quite a big European group, but we are diversifying more and more.”

Although the International Energy Agency (IEA) remains the primary source of information for governments, ETC have informal conduits, and are well connected with the EU presidency. “We have established good relationships with the European Commission and several governments in India and China,” Delasalle adds. “These are undertaken more informally through our local partners who work in those regions. We have heard more than once from both corporations and governments that they particularly appreciate being able to compare IEA perspectives with what I would call a slightly more aggressive or ambitious perspective coming out of ETC. There are fundamentals we have in common with the IEA, and we compare notes on a very regular basis. But in general, we are a step or two ahead of the IEA in terms of the pace of change that we are envisioning in the world. This provides an alternative comparison point for decisionmakers around the world.”

Rapid growth for renewables

In May, the ETC released a report analysing the feasibility of achieving a net-zero greenhouse gas emissions (GHG) economy by 2050 and the actions required in the next decade to put this target within reach. Clean electrification will be at the heart of this transformation enabled by the rapidly falling costs of renewable energy, with a complementary role for clean hydrogen technology in sectors that are difficult or impossible to electrify.

The report Making Clean Electrification Possible: 30 years to electrify the global economy, sets out why it is essential but also feasible and affordable to multiply the size of the global power system by four, while shifting to renewable-based electricity provision. “The challenge is the pace of ramp-up for renewable energy,” Delasalle adds.” In terms of total scale, if we had all the time in the world to get there, we do not think there are many resource challenges to get to a quadrupling of the size of the power system and do it in a renewable way. The fundamental difficulty is the pace at which we need to do it to meet the 2050 targets. There it is a question of ramping up investments and having the right policy environment to enable private investment scale.

“There is no successful energy transmission if there are not massive amounts of clean electricity in the system. It is 70 to 80 per cent of our future energy system. If we do not get clean electricity right and fast, then none of the sectors’ decarbonisation will happen. One of the critical things to focus on is understanding that we need the power system to be net-zero much earlier than 2050, so the timeline by which we need to decarbonise is much shorter for the power system than it would be for the rest of the economy.”

According to the ETC, the total final energy demand can remain stable if we are good enough in energy productivity improvements by mid-century, while growing social and economic development in developing countries. The big difference is that today, electricity represents about 20 per cent of that total final energy consumed, because there is a lot that is not in the form of electricity such as petrol for cars or coal that is burned directly in industry. Whereas in 2050, the ETC believe electricity will represent about 70 per cent of that total final energy demand. “The big shift is the electrification of the economy, which requires a quadrupling, or quintupling, depending on how aggressive you are, in your assumptions in your electricity demands that your total energy demand would remain, probably flat or even could decrease,” Delasalle explains. “We are saying in this report that we need to reduce our energy consumption as much as possible. We need to do it through the better energy efficiency of our equipment, but also through behavioural changes, flying less, shifting to having a more circular economy that reduces the amount of new steel or new cement that we need in the world.

“That is part of our story. But even if you do that, there is a moment in time where you still need to recognise that developing countries have a right to good living standards, and that politically it will be very difficult to make the transition happen if it means restricting everything the population wants to do. We need a very good combination of very drastic energy productivity improvements and  reduction of our energy use and the transition of all activities that we undertake to clean ways of doing it. We cannot just do one or the other.

Increasing flexibility

There are two types of flexibility challenges that are faced in the energy transition. First there is the day-to-day balancing between night and day, and the good news here is that batteries are getting cheaper and can enable us to balance the grid cost effectively. The bigger technology challenge is to account for seasonal changes. “In these longer periods when there is no sun or wind will require new forms of storage, like hydrogen storage that is not yet technology ready or peaking plants,” Delasalle explains. “The good news about peaking plants is we have many thermal plants in our current power systems that can provide that flexibility and start being used only when there are particular peaks in demand.

“That is feasible, at least during the transition period. Over time, we might need to retrofit them with carbon capture or start using hydrogen in those plants to reach net zero. But in the meantime, in the next ten to 15 years, we can use them as a flexibility mechanism that makes the integration of 70 to 80 per cent variable renewables in the grid completely feasible.”

Strengthening the power grid

It is often stated that the biggest challenge that the grid faces in terms of strengthening is the increasing volume of intermittent renewable power that it must incorporate. However, the ETC puts another challenge higher up the list in the fact that many sectors are electrifying. “As soon as you have electric cars, electric trucks, electric manufacturing processes, and hydrogen production from electricity, the demand on the electrical system is just growing extremely fast, regardless of whether you produce that energy with renewables or with gas,” Delasalle says. “This means the grid needs strengthening, especially in distribution, to meet the economy’s increased electrification. There is a real effort required from grids that requires anticipation, and that is a big message in our reports when it comes to the grid. There are all of those needs we need to anticipate because it takes time to strengthen the grid.

“We think the technology is improving to manage phenomenon such as two-way flow of electricity. What is a concern is how grid operators can get permitting to strengthen the grids and ensure that those investments are ahead of their needs. Because that is a shift in strategy for green investment, you cannot wait for the needs to happen. That is one of the big recommendations of the report. We need to consolidate permitting for everything renewable related, with a one-stop-shop for all processes and ensuring that some of the biggest infrastructures are declared as a matter of national emergency. If we do not do that, there is a risk that we will not go fast enough in terms of a build-up of the whole power system.”

The end is nigh for fossil fuels

When it comes to reducing the reliance on fossil fuels, the key challenge lies in developing countries, and in particular China and India. In both countries, coal currently accounts for over 60 per cent of total generation, and the stock of plants is relatively new with 77 per cent of China’s 1,060 GW coal capacity and 85 per cent of India’s 205 GW capacity built in the last 15 years. Given potential coal plant lifetimes of 40-50 years, China could have over 800 GW of already existing coal capacity, and India over 170 GW still operating in 2050.

“The big difficulty is in some regions where there is very fast growth and demand such as India, where we might still need to use the existing coal base for a while, but the economy is becoming less and less favourable,” Delasalle continues. “Then you just have to manage the social implications of that. Generally, the number of people working in coal mines, or in thermal coal plants is not huge across the world. But you still need to support and accompany those communities that are most affected to make it politically sustainable to phase out of coal.”

A role for hydrogen

The parallel report ‘Making the Hydrogen Economy Possible: Accelerating clean hydrogen in an electrified economy’ released at the same time sets out the complementary role for clean hydrogen and how a combination of private-sector collaboration and policy support can drive the initial ramp up of clean hydrogen production and use to reach 50 million tonnes by 2030. “There are two big routes to produce hydrogen, one is gas reforming, and there is a range of different technologies to do that; the other is just electrolysis of water,” Delasalle adds. “The first route is the blue hydrogen route based on natural gas where you retrofit carbon capture, while the green hydrogen route is based on clean electricity.

“Green hydrogen is more expensive than blue hydrogen, which is more expensive than grey hydrogen. The economics are shifting very fast, and we expect that by 2030, green hydrogen will be more cost-competitive than blue hydrogen in many regions and might even be more competitive than grey hydrogen in some very favourable regions. Therefore, in the long term, we envision that green hydrogen will probably be the dominant route to produce hydrogen because it will be cheaper.

“The hydrogen economy is at the same stage as wind and solar 20 years ago. We have seen what happens when you provide that initial support, then you unlock tremendous price reduction, and then it can go on without any form of subsidy after five or ten years. It is the same virtuous circle that we need to trigger for hydrogen.

“However, it is useless to invest heavily in hydrogen supply if you do not, at the same time, really create the demand for hydrogen. We are insisting that you need to do both simultaneously, particularly on the demand side, which means really pushing the decarbonisation of those sectors that have already used hydrogen, like refining.

“The fertiliser industry uses hydrogen and have been doing so for decades, but they use dirty hydrogen. If you can really push them to start using green hydrogen, they can provide you with most of the volume you need, to trigger cost reduction in green hydrogen production. Then on top of that, you will start developing new uses of hydrogen in trucking, shipping, aviation, or heavy industry, and that will progressively add additional volumes. But the very first volumes are really in the decarbonisation of sectors that already use hydrogen.”

On the face of it, this scale of change appears daunting, but it is achievable. It will only occur at the pace required if countries set out strategic visions for the growth and decarbonisation of their power systems with clear medium-targets, supported by critical actions including appropriate power market design and network investment frameworks. Annual installations of zero-carbon power capacity (primarily wind and solar) must rise to ten times current levels: total global investments of over $2 trillion per annum will be needed in clean power generation and supporting transmission and distribution networks, compared with $1 trillion annual investment in fossil fuels and $1.9 trillion annual investments across the total energy sector today. In some countries specific actions will also be needed to remove barriers to investment arising from planning and permitting processes, or to fast-track the availability of key skills and low-cost finance.

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