June 15, 2022, by Dr. Michael Losch (Board Member of the Club of Rome – Austrian Chapter).
Opening remarks and comments on the Energy Transition for All event on June 15, 2022.
The Club of Rome and the World Energy Council have both a tradition of bringing together scientists, intellectuals and business leaders in order to develop data-based projections and scenarios about the future of our resources and energy use. Both aim at sustainable solutions and contributing to the public debate. The Club of Rome started internationally with the report „The Limits to Growth“ issued in 1972. The World Energy Council has already been founded in 1923 in London as an NGO dedicated to energy system challenges and energy transitions, aiming at a safe and sustainable energy supply.
This year we celebrate the 50th anniversary of „The limits to Growth“. The Austrian Chapter already held an anniversary conference in May 2022 with the intention to have a closer look, in particular at the energy challenges during these dramatic times, where the climate challenge is coinciding with the war in Ukraine and the energy supply challenges resulting from it. It is an honour to bring together here at the TU-Wien both the Club of Rome and the World Energy Council communities in Austria.
The overriding challenge has been recognized by politics: We have the Paris Agreement and the European Green Deal aiming at climate neutrality by 2050, or in other words, a „net zero“ economy, as the IEA put it in its last year’s landmark report. The resource issue has become broad, it is not only about substituting fossil fuels with enough renewable sun, wind, water, biomass and others, but consequently also about land use, metals and rare earth, which are needed for the production of this transition.
In today’s debate, we propose to focus on how much energy we need for this transition to net zero. How much in the form of green electricity and how much in the form of green molecules? This has implications for storage, and transport and also for the ability to neutralize process emissions in the heavy industry. Hydrogen appears to be an important solution and the Austrian government has just presented the long-awaited hydrogen strategy in June 2022. I propose to look at these issues from three levels, the national Austrian level, the EU level, and the international context beyond Europe.
The Austrian challenge
75% of electricity consumption is renewable, but only 34% of overall energy consumption. In other words, 75% of electrons are already renewable, but 99% of the molecules (gas, oil) are still fossil. The Austrian Renewables Act (EAG – Erneuerbaren Ausbau Gesetz), adopted in 2021 provides the framework for reaching 100% renewable electricity by 2030. A key question in this context is how much electricity will be needed in 2030. The assumption for the EAG was that the current electricity consumption of 72 TWh will, according to the different scenarios from UBA, TU-Wien, and ÖE, rise to 78-88 TWh in 2030. As current renewable production is at approx. 54 TWh, the additional 27 TWh foreseen in the EAG appears reasonable.
However, the additional electricity needed for e-mobility, heat pumps, and also some additional electricity for domestic hydrogen production (1 GW electrolysers with an output of 4-5 TWh by 2030 according to the Austrian hydrogen strategy) have been, by and large, considered in the above-mentioned scenarios, the full decarbonisation of energy-intensive industries has not yet been part of those scenarios discussed back in 2019.
In total (industry, gas-fired cogeneration plants, buildings, transport), the current gas consumption is approx. 100 TWh, thus larger compared with the 72 TWh of electricity consumption.
The Austrian industry sector is not only the largest consumer of gas but is also accounting for approx. 34% of total national CO2 emissions. 60% of these emissions are process emissions which can only be avoided with new production technologies, either shifting to electrification (e.g. scrap steel smelting with arc furnace) or using hydrogen (e.g. primary steel reduction with hydrogen) and carbon capture and utilisation (CCU) in cement and chemical industries. Consequently, this industry decarbonisation challenge will require probably either another 30 TWh of electricity or a substantial amount of green hydrogen, way beyond the 4TWh which serves only as a replacement of grey hydrogen currently used in industry.
It is yet unclear in which proportion industry will decarbonize via direct electrification or via hydrogen. It is also unclear, how much hydrogen can be produced in Austria until 2040 and how much will have to be imported. It is yet clear that in principle it will be necessary to import large amounts of hydrogen once the industry is in fact investing in a hydrogen-based decarbonisation route.
The European context
Austria is a small land-locked country in the middle of the well-established and highly regulated EU internal markets for electricity and gas. Austria has electricity interconnectors with all important neighbours. With Germany alone, Austria has approx. 11 GW of interconnector capacity, which is more than Austria’s peak electricity demand of approx. 10 GW. That means, theoretically, Austria could import 100% of its electricity need from Germany. Of course, this is only theoretical, as the market faces a complex structure of time-sensitive transmission bottlenecks, the generation in Germany would not be sufficient at all times, and all countries need to develop their renewable potential to tackle the climate crisis. But it shows, how meshed and interdependent the electricity system in Europe is, and that significant changes in consumption or production patterns will have effects on neighbouring countries. But also shows that huge synergies can be reaped from an optimization throughout the European single market.
The gas system is even more “Europeanized”: Trade flows transiting through Austria via the gas transmission system are 6-7 times the Austrian domestic consumption of approx. 8 bn m3 per year. It is also evident that import dependency on gas is above 90% and can only be better diversified or reduced through the substitution of natural gas per se.
The questions arising from this situation are:
- In how far does it make sense not to strive for 100% autonomy but to benefit from the synergies of the EU internal market?
- Can Austria rely on the internal EU market also in times of crisis, in particular with regard to the Ukraine war and the ongoing efforts to phase out Russian gas?
- What are the effects of the German phase-out of coal and nuclear, and will the phase-out schedule be affected by the current crisis?
- What are the implications of the French planning to build 14 new nuclear power plants?
The discussion will probably be different for electricity and for gas, and this will have implications for the above-mentioned estimations of whether the industry will embrace more green hydrogen or more direct electrification for future investment decisions.
The larger dimension beyond Europe
In September 2021, the Austrian Chapter of the Club of Rome already organized a conference with the vision of cooperating closely with Africa towards energy transition. The potential of solar energy in the MENA region is enormous and has been recognized by the European Commission’s recent “REPowerEU” strategy. A large renewable potential for solar PV-based green hydrogen production is also seen in Ukraine and, based on off-shore wind, in the north sea. Not only the EU but also the German and Austrian national hydrogen strategies put a significant emphasis on international partnerships in order to develop infrastructure, standards and markets for climate-neutral hydrogen.
Not recurring to isolationism but engaging with our neighbouring regions can be a chance to increase the commitment and momentum towards fulfilling the Paris agreement. With green hydrogen, Europe has the chance to change significantly the current import dependencies from Russia and OPEC countries and to diversify towards many countries that have no fossil reserves but a large renewable potential. In that vision, sharing green technologies and developing common markets for electricity and green hydrogen can help create a win-win situation for Europe and its neighbours.