Electrification can cut emissions of transport, buildings and industry in Europe by 60% by 2050

Electrification of the transport, buildings and industrial sectors in Europe could slash greenhouse gas (GHG) emissions by 60% between 2020 and 2050, according to a new report published by BloombergNEF (BNEF).

A revolution in the use of energy by these three sectors is possible over the next 30 years, bringing about sharp reductions in CO₂ emissions, the study claims. Written in partnership with Eaton and Statkraft, the report – Sector coupling in Europe: Powering decarbonisation –outlines a plausible pathway of electrification, taking account of current levels of policy ambition in countries like the UK and Germany.

Victoria Cuming, Head of Global Policy Analysis for BNEF, comments: ‘Electrification, or “sector coupling” as it’s known in some countries, could make a huge contribution to the achievement of governments’ emission-reduction targets by exploiting the low carbon transition already underway in the power generation sector.'

Electrification could take place via a mix of ‘direct’ and ‘indirect’ changes. ‘Direct’ would involve the proliferation of electric vehicles (EVs) in as much of the transport sector as possible, and the spread of electric heating systems like heat pumps in buildings and some parts of industry; and ‘indirect’ would involve a switch to ‘green hydrogen’ – produced by electrolysis using renewable electricity – as a fuel to provide heat for buildings and as many industrial processes as possible, that otherwise would rely on fossil fuels.

‘However, action from policy makers will be needed if these changes are to happen,’ Cuming says. ‘Governments should introduce incentives or requirements to cut emissions from building heat, support demonstration projects for electrification, and iron out barriers to the production of green hydrogen. They should also consider how to engage energy consumers and civil society as they have a crucial role to play in enabling electrification of these new sectors.'

Albert Cheung, Head of Analysis for BNEF, adds: ‘Electrifying other areas of the economy will have significant repercussions for the power system. Policy makers will have to support the reinforcement and extension of the grid to handle higher power volumes and more renewables, and the deployment of batteries and other sources of flexibility to balance the system.’

The report estimates that the power system could need 75% more generation capacity by 2050 compared with what would be needed without the additional sector coupling – mostly comprised of low-cost wind and solar plants. The power system would also need to be more flexible due to the different energy consumption patterns of heating and transport. At the same time, the newly electrified sectors could create new sources of ‘flexibility’– with the ability to alter their consumption patterns, provided the right policies and technologies are in place.

Such an electrification pathway would enable power (directly and indirectly) to account for up to 60% of final energy demand by these sectors, compared to just 10% now. This would still be far short of full decarbonisation for those sectors due to the various hard-to-abate activities within them – including aviation, shipping, long-haul road transport and high-temperature industrial processes such as cement and steel – as well as the long replacement cycles of some assets.

To reduce emissions to net zero, governments would need to introduce more ambitious policies accelerating the ‘sector coupling’ pathway, and bring other technologies to market such as carbon capture, use and storage (CCUS). They would also have to address agriculture and land use.

It will be important to meet most of the additional power demand with clean power in order to maximise the climate benefits of sector coupling. Cheung says: ‘It will be crucial that governments and regulators adopt an electricity market design that enables developers of wind and solar projects, and those planning battery storage plants or demand response services, to anticipate level of returns that justify their investment.’