Eurada News nº402 - July 2020

Powering a climate-neutral economy

The European Union has set an ambitious goal: to become climate-neutral by 2050. In order to do so, Europe needs to transform its energy system, which is responsible for 75% of the EU’s greenhouse gas emissions.  The EU strategies for energy system integration and hydrogen will pave the way towards a more efficient and interconnected energy sector, driven by the twin goals of a cleaner planet and a stronger economy. 

Today’s energy system is still built on several parallel, vertical energy value chains, which rigidly link specific energy resources with specific end-use sectors, wasting a significant amount of energy. For instance, petroleum products are predominant in the transport sector and as feedstock for industry. Coal and natural gas are mainly used to produce electricity and heating. Electricity and gas networks are planned and managed independently from each other. Market rules are also largely specific to different sectors. This model of separate silos cannot deliver a climate neutral economy. It is technically and economically inefficient and leads to substantial losses in the form of waste heat and low energy efficiency. 

The European Green Deal is the new growth strategy of the EU; a roadmap to make our economy sustainable by turning climate and environmental challenges into opportunities across all policy areas and making the transition just and inclusive for all. The investments planned through it have the potential to stimulate the economic recovery from the coronavirus crisis. They will create European jobs and boost our leadership and competitiveness in strategic industries crucial to Europe’s resilience. In line with this, the European Commission has presented two strategies:  

1. Energy System Integration

The EU Strategy for Energy System Integration will provide the framework for the green energy transition. The current model where energy consumption in transport, industry, gas and buildings is happening in ‘silos’ – each with separate value chains, rules, infrastructure, planning, and operations – cannot deliver climate neutrality by 2050 in a cost efficient way; the changing costs of innovative solutions have to be integrated into the way we operate our energy system. New links between sectors must be created and technological progress exploited. 

The new flexible system will be more efficient and will reduce costs for society. For example, this means a system where the electricity that fuels Europe’s cars could come from the solar panels on our roofs, while buildings are kept warm with heat from a nearby factory, and the factory is fuelled by clean hydrogen produced from offshore wind energy. 

This strategy consists of 38 actions (such revision of existing legislation, financial support, research, and deployment of new technologies etc) and has three pillars:  

  • A ‘circular’ energy system, with energy efficiency at its core. The strategy will identify concrete actions to apply the ‘energy efficiency first’ principle in practice and to use local energy sources more effectively in our buildings or communities. There is significant potential in the reuse of waste heat from industrial sites, data centres, or other sources, and energy produced from biowaste or in wastewater treatment plants. The Renovation Wave will be an important part of these reforms. 
  • A greater direct electrification of end-use sectors. As the power sector has the highest share of renewables, we should increasingly use electricity where possible: for example, for heat pumps in buildings, electric vehicles in transport or electric furnaces in certain industries. A network of one million electric vehicle charging points will be among the visible results, along with the expansion of solar and wind power. 
  • The strategy promotes as well clean fuels, including renewable hydrogen and sustainable biofuels and biogas.  

2. Hydrogen strategy  

Hydrogen can support the decarbonisation of industry, transport, power generation, and buildings across Europe. The EU Hydrogen Strategy addresses how to transform this potential into reality through investments, regulation, market creation, and research and innovation. Consequently, hydrogen can power sectors that are not suitable for electrification. Ideally, renewable hydrogen should be produced by using mainly wind and solar energy. However, in the short and medium term other forms of low-carbon hydrogen are needed to rapidly reduce emissions and support the development of a viable market. 

This gradual transition will require a phased approach: 

  • From 2020 to 2024, with the installation of at least 6 gigawatts of renewable hydrogen electrolysers in the EU, and the production of up to one million tonnes of renewable hydrogen. 
  • From 2025 to 2030, hydrogen needs to become an intrinsic part of the European integrated energy system, with at least 40 gigawatts of renewable hydrogen electrolysers and the production of up to ten million tonnes of renewable hydrogen in the EU. 
  • From 2030 to 2050, renewable hydrogen technologies should reach maturity and be deployed at large scale across all hard-to-decarbonise sectors. 


Moreover, as part of the Green Deal, the Commission has agreed on a new approach for exploiting Europe’s offshore renewable energy potential in a sustainable and inclusive way. For this reason, the Commission has published a Roadmap outlining the different parts of this process – and has opened a four week period for public feedback on this roadmap. The aim is to gather views and input on the concepts from a broad range of stakeholders, ranging from national, regional, and local authorities to businesses, unions, civil society organisations, education organisations, consumer groups, and research and innovation organisations, as well as individual citizens. The consultation will be open until the 13th of August 2020

The broad aim of this initiative is to make it easier for the different forms of offshore renewable energy – notably offshore wind but also tidal energy – to fulfil their potential in the most efficient and competitive way, while also respecting the environment. This will help all Europeans to have access to more affordable clean energy and contribute to the EU’s security of energy supply. Given the potential for creating growth and jobs in the offshore renewables sector, the initiative was identified as crucial for boosting investments and future EU-wide deployment of offshore renewables, as recognised by the EU package for recovery from the Covid-19 crisis, building on the “Next Generation EU” instrument.  

Written by Owen Brown & Giacomo Frisanco