Decarbonising end-use sectors: buildings, transport, industry. Which strategies are best?
To that must be added direct electrification with renewables; biomass, green hydrogen and e-fuels; carbon capture as a last resort. Many other insights were gained (electrolysers, standards and certification, digitalisation and smart systems, and more.) The authors make it clear, however, that how best we should reach those goals, given promising new solutions can either surprise or disappoint us, is proving hard to answer.
The rapid pace of change in the energy sector is a positive sign for the transition. But the disruption it causes creates another big problem. It makes it harder to predict what will happen next. That makes strategies and pathways harder to design, and increases the risk of stranded assets. To try to come to grips with that future. As end goals, efficiency gains and a high renewables share of the grid are clearly a given.
Limiting the global average temperature rise to 1.5-degrees-C will require all sectors of the economy to reach zero carbon dioxide (CO2) emissions early in the second half of this century. A growing number of countries are committing to such net-zero-emission goals. There is general agreement that renewable energy and energy efficiency are the cornerstones of the energy transition and that renewable energy will provide the bulk of clean electricity in the decades to come.
The optimum trajectories, however, for the end-use sectors of buildings, transport and industry are less clear. That was the topic being explored in the IRENA’s Innovation Week 2020 in the context of the agency’s role as the global energy transition accelerator.Leading innovations in decarbonisation
The IRENA Innovation Week series has become a landmark biennial event to discuss the latest innovations that will lead a global energy transition. The 2016 and 2018 editions focused on the energy supply side, exploring zero-carbon power systems based on integrating high-shares of renewables. The third edition of the IRENA Innovation Week (5-8th October 2020) explored the energy demand side by providing important new insights into challenges, opportunities and emerging solutions for end-use energy sector decarbonisation, informed by IRENA’s recent Reaching Zero with Renewables report and its Collaborative Platform on Green Hydrogen.
Innovation Week 2020 provided a forum for in-depth accessible dialogue between policymakers, private sector representatives and the research community. IRENA partnered with World Economic Forum, Electric Power Research Institute, International Transport Forum, Hydrogen Council and others to organise sessions on smart electrification of end-uses; green hydrogen (electrolysis, ammonia and other e-fuels); growing the bio-economy; renewable solutions for industry and for transforming transport; and a session showcasing young entrepreneurship and innovation.
Over 100 expert speakers participated, including Energy Commissioners from the European Commission and the African Union, Energy and Climate Ministers from four continents, panellists and facilitators from over 35 different countries, and an audience of over 1,600 from circa 1,250 organisations and almost 140 countries. The level and breath of participation indicates the expanding recognition of the critical importance of decarbonising industry and transport and its significant implications for global economies.
Among the many insights and examples from around the world which were presented and discussed were some on transport decarbonisation. Southern California Edison noted that California’s DSO is looking to accommodate 26 million electric vehicles (EVs) by 2040 and is planning for massive infrastructure investments due to new regulations mandating all new passenger cars and heavy-duty vehicles be zero-emission by 2035 and 2040, respectively. Eurelectric echoed the importance of a transport energy transition, noting that they anticipate transport to represent the biggest challenge and opportunity, with 40 million EVs on the road by 2030 for Europe to be on track to meet is climate objectives.
Summaries, presentations and videos of each of the sessions are available here.
Ms Kadri Simson, Energy Commissioner at the European Commission highlighted some of the concrete actions needed to advance green hydrogen production within the region to enable deep decarbonisation. Ms Simson emphasised that in order to benefit from falling renewables electricity costs, hydrogen is a potentially attractive solution – but can advance only through targeted activities, such as an ongoing Swedish pilot project which aims to use green hydrogen to produce steel.
The European Commission has committed a budget of €5 million to €10 million for innovative cooperation between European and African partners on local and sustainable development, including the Europe-Africa Green Energy Initiative focused on hydrogen.
Mr Andreas Feicht, State Secretary at the Ministry of Economic Affairs and Energy, Germany, also highlighted the key role of green hydrogen in hard-to-decarbonise sectors in Germany in order to reach climate neutrality by mid-century. Within the context of Germany’s national hydrogen strategy, adopted in June 2020, Mr Feicht elaborated the need to make green hydrogen cost competitive by ramping up production and intensifying international cooperation to develop a global market, as core pillars of the strategy.
Germany will establish 5GW of green hydrogen production by 2030 (along with imports of 4-5 times that amount) and develop transport infrastructure, alongside regulatory and subsidy schemes to stimulate demand and create a critical mass. Germany has committed €2bn to fund international projects to create a sustainable global market. Mr Kwasi Kwarteng, Minister of State at the Department of Business, Energy and Industrial Strategy, United Kingdom, highlighted the importance of this discussion within the context of COP26.Rapid change is making predictions difficult
The four-days of discussion showcased many emerging solutions from around the world and explored the actions needed to fully unlock potential of renewables in the end-use sectors.
The discussions demonstrated an important shift in attitudes with many companies in the industry and transport sectors now actively considering the implications of the zero-carbon goal. In general, the objective is clear and accepted, decarbonisation by mid-century is a must.
What is less clear, however, is the strategy to achieve this. All parts of the energy system are in flux – with changes happening simultaneously on the supply and demand sides, and innovations such as digitalisation firmly taking hold and shifting business models. Changes on so many fronts make it difficult to chart a clear pathway, while increasing the risk of stranded assets.
Whilst the precise path may be hazy, the broad components and the order of priority for a transition pathway is clearer:
(1) the first priority is a focus on energy and resource efficiency (including circular economy);
(2) secondly a transformation of power systems to high renewable shares;
(3) thirdly direct electrification of demand with renewables;
(4) fourthly, for demand that can’t be economically electrified, the use of renewable fuels and feedstocks sourced either from sustainable biomass or through indirect electrification with green hydrogen and e-fuels;
(5) finally, as a last resort, for those emissions that can’t be dealt with in other ways, the use of CO2 removal and storage (CCS) technologies.
Some of the key points and common themes from across the discussions included:
- Affordable and scalable renewable solutions for the industry and transport sectors are on the horizon. Renewables will play a large role, accelerated through rapid power cost reductions;
- Both direct electrification and indirect electrification via green hydrogen and synthetic liquid fuels are needed and must be pursued in close coordination with the power sector;
- In Europe, and globally, a massive upscaling effort is needed, for example in the field of electrolysers where growth by four orders of magnitude is needed, a growth rate of 135% per year sustained over 30 years;
- Cost reductions can be accelerated through technological learnings, standardisation and upscaling; however, the gap is large, industry cannot tackle it alone so policy intervention is essential;
- While technical solutions are emerging, the economics need to improve and the applicability of the emerging solutions needs to be better understood – the cost of green hydrogen, for example, will vary widely depending on the location;
- A larger potential role exists for bioenergy and bio feedstocks within the industry and transport sectors; feedstock supply must be demonstrably sustainable, and good practice examples show that’s achievable;
- Standards and certification for green energy carriers need to be addressed multilaterally, and soon, if they are not to become a barrier to progress. For electrolysers, comparable metrics are needed to standardise what is meant by efficiency at rated power;
- Digitalisation and smart systems are needed to unlock increased system flexibility in transport and industry through demand response. Despite the implementation of smart electrification approaches, significant investments in electrification technology and infrastructure will be needed;
- Investments in enabling infrastructure, for example fast-charging solutions for freight or a hydrogen grid, must be scaled up substantially.
Importantly, there remains a collective lack of a shared vision of the trajectory sectors should follow and a lack of planning for how to do so. Sectorial and cross-sectorial and national and multinational roadmaps are needed, including buy-in from key players in both the public and private sectors.
Critically, the supply-side and systems-level effects of such a transition are not yet fully understood. We still need more nuanced answers to key questions such as:
- Where will all the electricity and green hydrogen and renewable fuels needed to power this transition come from?
- What are the infrastructure implications of such a transition?
- Can production of clean energy vectors add much needed flexibility to the electricity system as VRE shares increase?
- How can countries and trading partners establish standards and regulatory frameworks to ensure fair, sustainable trade in new energy vectors?
Over the coming months IRENA will publish deep dives into specific aspects such as electrolyser cost reduction, the role of biofuels in aviation, the potential of renewable methanol, the sector coupling implications of electrification and others. The recent MoU between IRENA and World Economic Forum is part of a broader effort to translate scenarios and strategies into change on the ground. Findings from IRENA’s Innovation Week 2020 will inform COP26 preparatory meetings in November as well as post-Covid19 stimulus packages of IRENA’s global members in terms of energy transition investment. Innovation Week 2020 has made clear that innovation is the key to enabling the energy transition the world requires. What’s needed now is action, and there’s no time to waste.
About the authors:
Sean Ratka is an Associate Programme Officer at IRENA
Paul Durrant is Head of End-use Sectors & Bioenergy, Innovation & Technology Centre, IRENA
Francisco Boshell is an Analyst at IRENA
This story was originally published on Smart Energy International