The Three Stages of the European Green Deal

Dr Arnt Baer's picture
Dr Arnt Baer, Head of Politics and Associations, Gelsenwasser
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Green deals for Europe and Germany with gas infrastructure

Fridays are for the future - this idea has changed the world. It leads to political decisions that no one could have foreseen two years ago. In Germany the climate package has been discussed for weeks in every newspaper, the television, and on talk shows. In Europe the new commissioner, Ursula von der Leyen, announced bold new climate objectives for 2030 and 2050, setting officials to work on a draft “gas package” of legislation - sending the idea back to the drawing board. Subsequently, the Commission has just worked through many anticipated reforms of the gas market rules. For a time, it was rebranded from the “gas package” to the “decarbonisation package,” with the Commission saying they no longer expect it to be published in early 2020 but much later in the year, perhaps even as late as 2021. The primary purpose of the package is to create Europe’s first regulatory framework for “green” (renewable) or decarbonised gas.

Phasing out of coal-fired power generation - yet without an alternative

The package will hopefully have both at its heart: the decarbonisation potential of natural gas in a coal-to-gas switch as well as “green” gases such as biogas and hydrogen produced from renewable electricity. Almost 70 million industrial and private customers in Europe are supplied by a gas grid which is 2.2 million kilometres in length. Even in light of the political goals of a massive reduction of greenhouse gas emissions in Europe, there is still a lot of potential to be found in gas-based supply. Coal to gas switching was decided in German energy policy at the start of 2019. But we must get rid of those emissions from coal, which are by far the most damaging.

Grid Networks are key to efficient greenhouse gas reductions

The next step is to change old heating systems. About seven million oil-fired heating systems are installed in the German market alone, plus many coal-fired heating systems still exists in large eastern German cities such as Berlin. Incentives proposed in the German climate package could help millions of home owners take the decision to modernise old heating systems. A major new study undertaken by Rheinenergie, Open Grid Europe and Gelsenwasser, which was also conducted in conjunction with the Institute of Energy Economics of the University of Cologne (EWI), demonstrated that with the help of existing gas and heating, greenhouse gas reduction targets can be reached by using current gas networks. A GHG reduction of 55% by 2030, and then 95% by 2050, is projected to be achievable for the energy industry, plus domestic and industrial buildings - working out at an estimated €139 billion cheaper than when utilising a highly-regulated approach towards electrification by means of installing heat pumps. The future energy system of Europe will be very much based on intermittent renewable energy sources. Even more concerning is that it is not yet perfectly clear to what extent heating and transport will be electrified, nor how power generation will be propped up if it becomes reliant on >50% from often-volatile and unpredictable offshore wind, or PV generation. A system based on so much volatility will need large scale back-up generation and storage in order to ensure security of supply.

Making natural gas green

The third stage that impacts most positively is to begin making natural gas green:  a step-by-step process that begins by blending hydrogen into transmission and distribution grids. We will soon understand better what is the most suitable way to do this, and which technologies will work best to integrate new energy carriers in the daily operation of European energy supply. At the moment, key associations and the gas industry itself are testing to what extent new technologies and applications are feasible. EU officials are currently hard at work trying to define different kinds of hydrogen and other “green” or low-carbon gases, based on their environmental footprint. Obviously, this will be a central pillar of the new decarbonisation package.