Decarbonisation’s weight in the balance of power

Over the past years, decarbonisation has been given a renewed raison d'être. In 2018, the challenge of our time was clearly climate change, but today, things have changed. That is not to say that climate change has been solved – far from it – but from another direction, we face geopolitical tension not seen since the height of the Cold War. Now, in 2023, this dual-threat necessitates decisive action as Europe grapples with security of supply in energy, all the while facing an ever-likelier 1.5C and more of global warming and its consequences.

In 2018, we launched our flagship report, Decarbonisation Pathways, which highlighted the power of electrification to decarbonise Europe’s economy in the fight against climate change. Later next month at Power Summit 2023, we will launch the sequel to that report. Titled Decarbonisation Speedways, this report will drive home the pressing role decarbonisation has taken on in this new reality, and this new reality will form the basis of #PowerSummit23’s theme, #BalanceOfPower. These two topics have an inextricable link that we are taking this week’s #FridayFeature to explain.

History’s renaissance and a new balance of power

At the end of the Cold War, Francis Fukuyama famously identified the fall of communism, symbolised by the collapse of the Soviet Union, as the “end of history”, as the century-long ideological struggle between fascism, communism, and liberalism came to an end with liberalism as the victor. What ensued was unfettered globalisation, economic expansion, and the establishment of a rule-based world order through the establishment of the World Trade Organization and the expansion of supranational institutions like the European Union and alliances like NATO . Emerging economies as well were getting their day in the sun with the BRICS countries (Brazil, Russia, India, China, and South Africa) were heralded as the up-and-coming powers of the 21st century. Across the globe, peace and prosperity were to be the new norm – conflict a thing of the past – history finished. But it was not. As former Prime Minister of Finland, Alexander Stubb put it, we have only been on a vacation from world history.

Indeed, it did not turn out as Fukuyama said, not even in the last thirty years. The War on Terror, the Global Financial Crisis, and the rise of populism are a few cases in point. Beyond that, there is also the rise of a once-reserved China. Deng Xiaoping’s adage of “Hide your strength, bide your time” has given way in the era of Xi Jinping to a more outward-focused power willing to throw its weight around. Russia, the so-called “democratic” reincarnation of the Soviet Union, has slowly become the puppet of the ex-KGB operative turned President’s will, Vladimir Putin. Today, these forces are aligning to upend the geopolitical balance of power that was taken for granted in the early 1990s, with the most clear cut evidence of this manifesting in the Russian invasion of Ukraine.

Cleaner and greener – the EU’s pathway

The European Union has changed tremendously over these past thirty years too. No longer a loose collection of States cooperating on steel and agriculture as it was in the early years, it has become a functioning supranational framework for economic, political, legal, social, and cultural integration. But facing some of the geopolitical tension already in the late 2010s and with the signing of the Paris Climate Accord in 2015, clean and green became the EU's new pathway to success.

Starting with the European Green Deal announced by European Commission President Ursula von der Leyen , the bloc set a goal to become the first net zero continent by 2050. But not just that, it also wanted to become a powerhouse green economy. This came a year after our Decarbonisation Pathways report which dubbed electrification the future of European energy. Defined, electrification is the use of electricity in a higher share of final energy demand, as discussed in more detail here, and is the most cost-effective and efficient use of energy for myriad reasons. With the potential to eliminate significant shares of emissions from high-emissions sectors like transport, buildings, and industry, Europe has remained on this pathway ever since.

This is evident when looking at the subsequent package of legislation tabled by the Commission in 2021, known as the Fit for 55 package. With the objective of reducing emissions to 55% below 1990 levels, a slew of files aimed to price carbon emissions, mandate renewable energy shares in the energy mix, improve the performance of buildings’ energy efficiency, do away with internal combustion engine (ICE) cars and vans, and so on. At the heart of all these files was electrification - whether it be through renewable generation, heat pumps, electric vehicles, etc. Then, after President Putin ordered Russian troops across the Ukrainian border in February last year and proceeded to blackmail Europe with gas deliveries over its support for Ukraine, the Commission upped the ante.

The REPowerEU plan is an even more ambitious version of Fit for 55, essentially doubling down on electrification to reduce reliance on foreign energy imports. Conveniently, foreign energy imports were also predominantly fossil fuels, meaning decarbonisation remained at the plan's core. With its 763 GW of renewable capacity additions targeted for 2030, a clear prerogative to end Europe’s reliance on fossil fuels, and the European Climate Law on top of that legally obliges the EU to set intermediate 2040 climate targets by this time next year, the Decarbonisation Pathway of 2018 has been paved into a speedway.

The Decarbonisation Speedway for climate and security

With just over a month to the launch of Decarbonisation Speedways, what has remained clear throughout the tumult since Decarbonisation Pathways is that electrification is and remains the only cost-efficient way to decarbonise faster. Although decarbonisation scenarios have changed with the geopolitical upheaval, a global pandemic, and intensifying climate change, this fundamental remains. What has also become clear is that the right enablers will need to be in place for this electrification to happen. As has been seen, volatility is becoming omnipresent in what some have labelled a permacrisis world. To make sure electrification can bolt ahead, the conditions for that to happen will need to be secured. If we can put those in place, Europe can reach decarbonisation objectives, and it can do so while delivering benefits to the whole of society. It is the Decarbonisation Speedway that can deliver on climate objectives and energy security for the new balance of power.

Be sure to join us at Power Summit in Brussels this year to learn more about this! We will be at Maison de la Poste on 20-21 June. You can register HERE.

This week's edition written by:

Nicholas A. Steinwand, Strategic Communications Officer -?Eurelectric