Successes like these mean that the EU has reduced its emissions by more than any other equivalent economic area. And it has done so without sacrificing its economy. Indeed, since 1990 the economy has grown more than 60%. That is a remarkable achievement.
But this year’s pandemic has brought the balance between lowering emissions and rebuilding the economy into sharp focus. Can Europe afford to ‘build back greener’? Can it afford not to?
To answer this, we need to take three steps. First, we must understand what has led to the successes of the past three decades.
Between 1990 and 2018, the carbon intensity of the European economy halved, from 582 grams of CO2 per euro generated to just 277 grams.
At the heart of this reduction is a dramatic change in the continent’s energy supplies, whose emissions fell by one third despite an increase in energy consumption. A switch in the energy mix from coal to natural gas kicked off the improvement. Natural gas produces less than half the emissions of coal, allowing substantial reductions in carbon dioxide without undue economic pain. But even more impressive is the increase in renewable energy generation. Last year, power production from wind and solar surpassed coal for the first time and renewables are now Europe’s leading source of electricity.
Second, we need to accelerate the energy transition going forward. The member states that still use coal for electricity should speedily phase it out. Coal still makes up an extraordinary 15% of the EU’s power generation and causes a disproportionate amount of emissions.
Beyond this, we need to dramatically increase renewable power by looking out to the waters around the continent and to the sunshine above it. Solar power has become so cost efficient that farms have been built as far north as Finland. But over recent years, it has become more challenging to find space for onshore wind farms, especially as local opposition has grown. With shallow seas stretching around it, Denmark has already shown what can be achieved: with more than 550 turbines, it now generates around 20% of its power from offshore wind. Recent offshore wind auctions in France, Germany, Belgium and the Netherlands show that Denmark’s achievement is not a one-off.
The third and final step towards net zero is the most challenging. Parts of our economy, such as heavy transport, heavy industry and back-up power, cannot easily be converted to renewables. How do we replace the natural gas that heats steel furnaces and provides electricity when solar and wind cannot? Wisely, the European Commission is now focusing on the role that hydrogen can play.
When hydrogen is used for energy, no carbon dioxide is emitted. So-called ‘green’ hydrogen can be produced from the electrolysis of water with renewable power, whilst ‘blue’ hydrogen can be produced from natural gas, with the emissions captured. Both technologies are proven, even though neither have yet been deployed at the scale required.
The European Commission’s new hydrogen strategy envisages 6 GW of electrolysers by 2024, and 40 GW by 2030. To achieve these targets, we will need to address both cost and capacity. At the moment, green hydrogen costs more than four times as much as natural gas. But capacity is even more of a challenge. Last year, just 0.03 GW of electrolyser capacity was added globally. Even the more modest 2024 target would require 1.5 GW of annual installation capacity – a 50-fold increase on current global levels. In addition, we would need to build a lot of additional wind and solar farms to provide power to the electrolysers.
The Commission has set up the European Clean Hydrogen Alliance to encourage investment, and companies will work hard to ramp up construction. But we should acknowledge that it’s an enormous challenge, especially at a time when few consumers can afford to see their energy bills shoot up.
Fortunately, blue hydrogen costs less than half the price of green hydrogen, and the natural gas pipelines to supply it are already in place. When blue hydrogen is used in place of natural gas, 95% of carbon emissions are eliminated. Projects like H2morrow in Germany and Zero Carbon Humber in the UK are already moving forward, showing that companies are ready to invest if governments support them.
Some say that we should avoid blue hydrogen and allow only green hydrogen. But that would make the challenge of decarbonising Europe far harder. It is not just that blue hydrogen provides 95% of the benefit of green at less than half the cost. It is that blue hydrogen allows us to act faster and to prepare the infrastructure which can then be used for green hydrogen. The cost of green hydrogen will fall over time and as it becomes more affordable, the pipelines and consumers will be ready to take it.
As we rebuild Europe’s economy after the pandemic, we do indeed need to build back better. We simply cannot afford not to. But to succeed, we must bring together every tool that is available: eliminating coal, accelerating renewables, investing in hydrogen. Companies need to work with governments. Blue hydrogen needs to work with green. Suppliers need to work with consumers. We all need to work together, and we need to start now.