#betd21 Panel: The Great Shift to Electrification - Panacea or Headache?
The global shift towards an intensifying electrification of functions and lifestyles has gathered considerable momentum in past years. It is considered today to be a mega trend of the new century. One that accelerates the energy transition but also involves some risks. This session explores the limits to mass electrification. How about industrialized and developing countries? And can electricity replace today's heating and cooling technologies? Your question, ladies and gentlemen. The commercial availability of a growing range of low emission technologies puts electricity at the forefront of decarbonization efforts. But does that make the future all electric as is sometimes clim or d oes it overstate electricity's contribution and risk obscuring complexities and trade-offs? Those are some of the questions that we want to explore with four expert guests. And as always, our timeframe is quite tight, so I'm
going to keep the intros short and also ask all of our speakers to please keep your answers as brief as you can, two minutes would be very helpful because we really don't have much more than 20 minute, all told, for this session. And I'm very pleased to welcome professor Chems-Eddine Chitour. Also Claudia Kemfert is with us, the head of the Transportation and Environment at DIW. Great to see you again, Claudia Kemfert. Alix Chambris is joining us, Vice President of the group Of Public Affairs and sustainability at a group headquartered here in Germany. I'm pleased to welcome Dr. Alan Finkel. Great to see you again. Let me begin with an overview and ask you all to look at the reality behind the electrification hype. I'll start out with Minister Chitour. Algeria is one of the big African countries
and important natural gas exporter, of course, and also has enormous potential for solar power production and export of that power. So do you think that by 2050 Algeria could switch its energy model which here to for has been based on natural gas and over to green hydrogen? Claudia, could you give us a brief overview of the status and trends of the electrical usage in developing and established countries to help us understand this great shift to electrification we are talking about? Yes, of course. Melinda, great to see you again. I'm happy to be here. Just to briefly explain, the main future energy consumption will be electric with few exceptions. Indeed the new oil. If we want to keep global warming limited below 2 degrees, the global greenhouse gas emissions must fall to zero as quickly as possible. That's zero, not net zero.
So renewable energy is the only energy that meets all the requirements that is emission-free, low-risk, available everywhere and useable today, decentralized and cost effective. The current nuclear fossil energy system is not compatible with environmental goals. It's risky. We need renewable water, wind, storage or renewable energy system for everything, while also addressing the non?energy emissions. So, the transition involves electrification of most everything. That is vehicles,
heating, building and cooking, and industrial processes that we will talk about here also today. So, what we need is an electricity entirely provided with wind, water, geothermal and solar. And we estimate due to the efficiency of the electricity of contribution and other factors, such electrification will reduce worldwide energy needs over 50%. So although overall energy requirements will decline, the electricity requirements will be about 50% greater than today.
So the more energy will be electricity. And the biggest challenge in the industrialized countries is to completely decarbonize the economy and implement the energy shift towards 100% renewable energy system. As a fossil nuclear energy system dominates in almost all countries, there is a long way to go, and we are running out of time for climate protection reasons. And renewable energies have many advantages. The costs are continuously decreasing. They are
decentralized and can be used anywhere. So solar energy, for example, can be installed on all house roofs. This is particularly attractive for developing countries. Renewable energies avoid fossil energy wars and also nuclear weapons and the energy transition based on a 100% renewable energy is the best peace project we have on earth. But green electricity must be used wherever possible. In the mobility sector by strengthening the public transport and individual transport, and also buildings with heat pumps in combination with consistent energy savings. So, electricity?first is the model. Energy?saving and eliminating energy waste is also crucial. There are only a few areas where electricity cannot be used directly.
That is heavy transport outside of trolley tracks where green hydrogen or synthetic fuels, that means fuels produced from green electricity, will be used. And just as, for example, shipping and transport as well. And heavy industry, especially the production of steel and metals where coal GHB have to be replaced. And green hydrogen will have to be used there,
too, but it's really important that we talk about green hydrogen. That it's really green. That it's produced with green electricity. Because all other colors are either too high in emissions or use unsafe processes such as carbon capture and storage and thus environmental hazards. Inefficient high costs exclude high risks from enormous and expansive technologies such as nuclear. So, hydrogen has no role to play in the heating sector or in cars, but hydrogen must be produced with green electricity as it loses a lot of energy in the production and loses process. Hydrogen is not the new oil. So, renewable electricity is the new oil. Thanks. Thank you very much. Let me go straight to Alix Chambris. So we just
heard there from Claudia Kemfert, yes, the shift is happening. We're looking at a mostly if not all?electric future. What does that mean for you in the heating industry? Will that change transition strategies in the building sector? Thank you. So, we agree that electrification will play a huge role in helping us to reach the Net Zero targets in buildings. So we will see an increase electrification of space heating and heat pumps for sure will be the big winner of the energy transition in buildings. Yet come to the title, panacea or headache? And we are convinced that we need a balance, a mix of clean gas in buildings by 2050 to optimize energy system costs and also take the people side into account. So let me summarize the three reasons why we believe that green gasses will still play a role and must play a role in buildings in the Net Zero economy.
The first reason is that buildings are extremely heterogeneous and they're a very hard to abate sector. And one solution does not fit all the different building types and the taste of people. So we need to add as many decarbonizing options as possible to meet the Net Zero by 2050. The more options on the way, the higher the likeliness that we meet the target. Another reason is social acceptance. A one?size?fits?all doesn't fit the people's preferences and people's choice and, again, financial power. And finally, the most important reason why we believe
that a fuller, complete electrification is not the right way. It is the energy system perspective. So we have to remember that space heating, especially in central Europe, a colder region, is extremely seasonal, and in the wintertime, the heating not only increases close to three?fold or more, meaning that you need to supply this heat demand in the wintertime where often you have sometimes no wind and often no sun. So there is really this energy security approach to have in mind. And allowing a share of gas to co?exist in buildings by 2050 reduces the system costs. It reduces the need for backup generation capacity. It reduce ?? it optimizes the size of the electricity grid. And overall just to take the example of Germany, it was calculated you could save on a yearly basis 11 billion Euros just by allowing a smart dose of gas to exist next to electricity in 2050.
Thank you very much. Let me go over now to Alan Finkel. We have a bit of a debate here so far as to whether green gas and electrification are compliments or in a sense competitors. Claudia Kemfert telling us that there are some sectors where green gas, green hydrogen really won't make much of an impact, and I wonder if you can resolve this or at least where you would cast your vote on this question. What role is hydrogen set to play in Australia's energy transition and how do you see it playing off with electrification? Melinda, thank you, and thank you for the invitation to be here. I don't have any doubt that it's a false dichotomy to play off electrification against green gas or green hydrogen. We need all
the weapons at our disposal in order to ensure the transition. Australia's been doing that certainly as, of course, Germany and other countries. In Australia, we've embarked on a fairly remarkable energy transition, beginning with the electricity sector. We see that as the most important place to stay ?? to start, and we've been deploying at record levels of variable renewable energy electricity. Solar and wind last year. Approximately 26% of all of our electricity was generated from solar and wind. And we're very pleased with the fact that we now have the highest installed solar generation capacity per person in the world by quite a large margin and we have the highest percentage of solar rooftops in the world.
We expect this transition in the electricity sector to continue pace. Investors are keen. The commitment to eliminating emissions in the electricity sector makes sense because clean electricity will be key to successful decarbonization of the other big sectors, as we've heard, such as transport, building heating and industrial processes. And collectively, the use of fossil fuels today for all of these purposes rent rates three?quarters of the global greenhouse gas emissions, so replacing fossil fuel use with clean electricity and clean hydrogen is the way to start. It's the best return for our effort. But
even though the electricity is almost like magic, it's not always the most convenient way to deliver energy. And sometimes we need a high?density fuel, and I would argue that the role for hydrogen and its derivatives will be significant in the heavy?duty long?haul trucks and trains and ships. For Australia and for other countries, the ability to trade renewable energy between the continents in the same way that we have been trading fossil fuel energy between the continents, that ability to trade across the planet will need a way to package renewable energy for shipping. And, of course, in these cases, the solution is hydrogen and its derivatives such as clean ammonia. In 2019, the Australian government released our National Hydrogen Strategy, and the congratulate Germany for the release of yours last year. Our strategy envisions multiple roles for hydrogen
in Australia's energy transition. Domestically, we will use hydrogen for industrial feed stocks and for heating. We'll blend it into the gas networks, and we'll use it for long?distance heavy?duty transport. But, of course, as an export, we will build on our willingness to take on huge projects. Become a hydrogen powerhouse, shipping sunshine to the world. We're not stopping there, though. You need to use every tool available. So, last year
I had the honor of leading the development of the Australia's low emissions technology roadmap. And in that is our first installment. We have prioritized five low?emissions technologies and set financial stretch goals to focus investments by the governments and the private sector to get the costs of these technologies down. So, one example, clean hydrogen is actually part of the low?emissions technology roadmap and the focus on reducing the cost to under 2 dollars Australian per kilogram, which would be under $1.50 US per kilogram. Our other five priorities such as electricity from storage and zero?emission steel. So, to finish,
let me say that it's clear, Australia, we see clean hydrogen as key to the transition to zero a missions across the economy, but as a compliment to electrification. And together clean electricity and clean hydrogen, indeed, are the panacea. Thank you very much. And I know that Australia is, in fact, involved in a green hydrogen cooperation with Germany. So, many thanks to you. Ladies and gentlemen, we are really actually already
out of time. This is a very short session. I'd like to ask each of you in one phrase, literally less than 30 seconds each, to tell me what you see as the biggest challenge to this complimentarity between electrification and green hydrogen? You've said we need to use all the tools in the toolbox. What's the single biggest challenge. One phrase only. Claudia Kemfert? Green electricity technology is valuable and must be used everywhere. Hydrogen is the champagne and only used for special occasions. Dr. Crane: Thank you very much. Alix Chambris? Yes. So, we agree that green electricity and green gas, especially hydrogen,
are the panacea of the energy transition, but what we saw the biggest challenge is to secure the space heaters in the buildings and global building stocks. So changing gas mix. And for us ensuring hydrogen revenues of space heaters is a no regret move. Thank you very much. Dr. Finkel, if you would. For complex economy we need to have multiple solutions at disposal. We shouldn't pick winners. We have to focus on carbon dioxide into the atmosphere rather than choosing and focusing on favorite technologies. It's emissions that count. Thank you very much to all three of you for this very succinct, very, very interesting exchange. I appreciate you
being with us and also your patience with our very short timeframe. Many thanks.