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An EU Strategy for Energy System Integration: Explainer

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What is energy system integration?

Energy system integration refers to the planning and operating of the energy system “as a whole”, across multiple energy carriers, infrastructures, and consumption sectors. It creates stronger links between them with the objective of delivering low-carbon, reliable and resource-efficient energy services, at the least possible cost for society. Energy system integration is the pathway towards an effective, affordable and deep decarbonisation of the European economy.

The current energy system is still built on parallel and vertical energy value chains, which rigidly link specific energy resources with specific end-use sectors. This model of separate silos cannot deliver a climate neutral economy. It is technically and economically inefficient, and leads to substantial losses in the form of waste heat and low energy efficiency.

The Energy System Integration Strategy sets out a vision on how to accelerate the transition towards a more integrated energy system, in support of clean energy and a climate neutral economy while strengthening energy security, protecting health and the environment, and promoting growth and global industrial leadership.

The Strategy sets out 38 actions to implement the necessary reforms. These include the revision of existing energy legislation, financial support or research and deployment of new technologies and digital tools, guidance to Member States on fiscal measures and phasing out of fossil fuel subsidies, market governance reform and holistic infrastructure planning, and improved information to consumers.

What are the main elements of the strategy?

The strategy is built on three complementary and mutually reinforcing elements:

  • First, a more circular energy system, where no energy is wasted and where energy efficiency is the first consideration. An example is to facilitate the reuse of waste heat from industrial sites and data centres.
  • Secondly, the use of cleaner electricity produced from renewable sources. As renewables become cheaper, electricity will become cleaner. We need to extend the use of that clean electricity into more areas such as buildings, industry, and transport, which traditionally relied on fossil fuels.
  • Thirdly, the promotion of renewable and low-carbon fuels, including hydrogen, for sectors that are hard to decarbonise, such as heavy transport and industry. This will be done by: unlocking the potential of sustainable biomass and biofuels, renewable hydrogen, and synthetic fuels; enabling carbon capture, storage and use; clarifying the definition of different renewable and low-carbon fuels and supporting their development; and promoting innovative projects.

Finally, the strategy will be pro-consumer, providing clear and easily accessible information on the cleanest solutions and climate-friendly choices in the market, enabling and encouraging smarter and more sustainable energy use. It will rely on an increased use of digitalisation to connect consumers, producers and energy system operators with each other. This will also contribute to the fight against energy poverty.

The strategy lays down concrete policy proposals that the Commission will present over the coming months and years to deliver on these objectives.

Does this strategy help to reach the goals of the European Green Deal?

Yes. Energy production and consumption account for 75% of our greenhouse gas emissions. The energy system is therefore crucial to delivering on the European Green Deal’s objective of reaching climate neutrality by 2050. The energy system also underpins our economy and our daily lives. It provides jobs and livelihoods and strengthens European competitiveness and innovation.

Energy sector integration enables to combine decarbonised and renewable energy supply with efficient demand side technologies such as electric motors, heat pumps and fuel cells. Deep greenhouse gas emission reductions can only be reached through a combination of energy efficiency and very high shares of renewable energy. And both energy efficiency and renewables penetration can be facilitated by a more integrated energy system.

A new inter-connected system will be more efficient and “circular”, capturing and re-using waste energy. It will be cleaner, with increased use of heat and electricity produced from renewable sources applied in efficient demand side applications in industry, transport and heating. And for those sectors where electrification is difficult, the strategy proposes steps to promote cleaner fuels, including sustainable biofuels and biogas, and renewable hydrogen.

All this will contribute to combatting climate change and reach the goals of the European Green Deal while keeping the costs of the energy transition under control, thus contributing to a fair and just transition.

Will the strategy help Europe’s economic recovery from the Covid-19 crisis?

Yes. The strategy will be another building block of the economic recovery in the aftermath of the COVID-19 crisis. The transition to a more integrated energy system is of crucial importance for Europe, now more than ever. The Commission’s Next Generation EU recovery plan presented on 27 May 2020 highlights the need to better integrate the energy system, as part of its efforts to unlock investment in key clean technologies and value chains. By relying on greater use of clean and innovative processes and tools, the path towards system integration will also trigger new investments, jobs and growth, and strengthen EU industrial leadership at a global level, contributing to the economic recovery.

Does the strategy continue to support fossil fuels such as gas and coal?

On the contrary, the strategy is a roadmap to accelerate the phasing out of fossil fuels through 3 levels:

  • Energy efficiency and circularity, and the use of local renewable resources;
  • Electrification wherever possible, to replace the uses of gas, coal and oil by the direct use of electricity produced from renewables;
  • Renewables and new fuels based on renewables to replace fossil fuels in processes that cannot be converted to electricity;

As regards to gas, the strategy proposes a pathway to replace natural gas with sustainable renewable gas and new synthetic gases based on renewable sources such as hydrogen and synthetic methane.

Does the strategy contribute to the goal of a just transition?

The objective of the strategy is to reach our climate objectives at the lowest possible cost for consumers and public budgets. The strategy also proposes to reinforce the role of consumers in driving the transition to a decarbonised, decentralised energy system. Providing clear and easily accessible information will enable citizens to make climate-friendly choices, change energy consumption patterns and be informed about the best technology options available to them.

The strategy also takes advantage of the rapidly decreasing costs of renewable energy across the EU, which results in lower prices for the consumers, increased energy security, and a more inclusive energy system. In addition, this strategy aims at strengthening the competitiveness of the European economy by promoting growth and technological innovation across the whole EU.

Does the strategy respect the ‘energy-efficiency-first’ principle?

Yes. The energy-efficiency-first principle is at the core of energy system integration. Energy efficiency reduces the overall investment needs and costs associated with energy production, infrastructure and use. It also reduces the related land and materials use, and the associated pollution and biodiversity losses.

Energy system integration can help the EU achieve greater energy efficiency through a more circular use of available resources and by switching to more efficient energy technologies. For example, electric vehicles are much more energy efficient than combustion engines. Applying this energy-efficiency-first principle consistently across the whole energy system will be done by giving priority to demand-side solutions whenever they are more cost effective than investments in energy supply infrastructure in meeting policy objectives.

Other measures will ensure that customers’ decisions to save, switch or share energy properly reflect the life cycle energy use and footprint of the different energy carriers, including extraction, production and reuse or recycling of raw materials, conversion, transformation, transportation and storage of energy, and the growing share of renewables in electricity supply.

How does the strategy support EU leadership in clean energy technology?

The strategy aims to ensure that the EU fully exploits its head-start and expertise in renewable and smart energy technologies. Specific sectors and value chains that are expected to have a central importance and where the EU is well positioned for global leadership include:

  • district heating
  • smart grids and appliances
  • digital tools to support the integration of electric vehicles
  • hydrogen supply and demand side equipment.

How does the strategy affect the EU’s security of energy supply?

The EU is currently importing 58% of its energy needs, mostly in the form of oil and gas. With the clean energy transition, the EU will decrease its dependence on fossil fuels and fossil fuel imports. The Energy system integration strategy will facilitate this process. The EU will consume less energy overall, increasingly rely on domestic renewable resources and gradually diversify its energy imports towards cleaner energy carriers, such as renewable hydrogen. These energy savings, diversification and domestic production will help to build a more resilient European economy.

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As fuel prices rise, companies look to energy efficient solutions

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With fossil fuel prices reaching record highs, companies around the world are focusing on energy efficiency to save money and reduce the emissions driving the climate crisis.

Research shows that a safe future below 1.5°C requires the world to cut 30 gigatonnes greenhouse gas emissions (CO2) annually by 2030. Carbon emissions need to be cut by building smart cities and managing land and resources more efficiently.  Transport and buildings are among the largest contributors.

– a United Nations Environment Programme (UNEP)-led global effort supporting developing countries to move their markets to energy-efficient appliances and equipment.

“This improvement in energy efficiency will also reduce electricity bills for companies and support the scale-up of renewable energy,” he added.

Improving energy efficiency

Energy efficiency can take many forms, with U4E focusing on lighting, refrigeration, air conditioning, distribution transformers and electric motors. 

LED lamps, for example, are not only more efficient than conventional lamps, but they also last 20 times longer. Research shows that by switching to LED lighting in 156 developing countries, over 110 terawatt-hours (TWh) could be saved by 2030, nearly the same as the current electricity consumption of the Netherlands.

Similarly, by increasing efficiency in distribution transformers, which adjust voltage and current and are placed between the power plant and the consumer, 60 TWh could be saved by 2040, or the same as the current consumption of the Czech Republic.

“Half of the near-term reductions in emissions in the energy sector can be achieved through energy efficiency, for example, by using more energy-efficient appliances and lighting and more efficient motors,” said Miriam Hinostroza, Head of the Global Climate Action Unit, at UNEP’s Energy and Climate Branch.

Cost effective solutions

Companies have found that energy efficiency is a double win, it’s good for their bottom line but it’s also good for the environment. Hitachi Energy, a global technology leader that is advancing a sustainable energy future for all, has been working with U4E to improve the efficiency of distribution transformers in developing regions like Africa.

These transformers are a key product in the power value chain, with electricity typically passing through five of them between the power plant and the consumer.

U4E research shows that a transition across the African continent to the most energy-efficient transformers could save 5.7 TWh a year, worth around US$ 400m by 2040.

This transition would also reduce CO2 emissions by 4.7 million tonnes a year. The transformers also have the added benefit of being more stable, reducing outages and increasing energy security.

“Transformers are critical for enabling an efficient and safe flow of electricity, operating continuously around the clock,” said Bruno Melles, Head of the Transformer Business at Hitachi Energy.

“Energy efficiency brings energy savings and reduces environmental impact, but also means more efficient use of existing infrastructure, which is in line with Hitachi Energy’s Sustainability 2030 strategic plan, which includes the target to achieve carbon-neutrality in our own operations.”

“In developing countries, energy efficiency also contributes to increasing the availability and access to electrical energy, contributing to key UN Sustainable Development Goals,” added Melles.

It is not just in Africa where U4E is helping to drive change. In Türkiye, U4E has been working in the industrial sector to help improve efficiency in motor-drive systems. Around 46 per cent of net electricity consumption in Türkiye comes from the industrial sector, and about 70 per cent of this comes from electric motor-drive systems, many of which are inefficient.

UNEP, through U4E, has been providing technical assistance to the Promoting Energy-Efficient Motors in Small and Medium Sized Enterprises in Türkiye (TEVMOT) project.

“The TEVMOT project was conceived to tap into this huge potential for energy savings through the transition to higher efficiency motors and to tackle the challenge of achieving these savings in an industrial sector,” said Özge Renklidağ, a Project Manager with UNDP.

“More than 90 per cent of the enterprises are small and medium-size enterprises, which have traditionally had difficulties in obtaining access to finance for energy-efficient products.”

The project, which started in 2017, and has been extended until the end of 2023, will contribute to Türkiye’s intended Nationally Determined Contribution commitment to reduce its greenhouse gas emissions by 21 per cent from the business-as-usual level by 2030.

“Through projects such as these, increased energy efficiency has been shown to offer real contributions in reducing greenhouse gas emissions,” said Blake, “U4E is working across the world to ensure that sustainable, cost-effective solutions are offered.” 

UNEP

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Greenpeace tells Big Oil to stay clear of Congo’s carbon bomb

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The world’s largest oil and gas companies are urged by Greenpeace to sit out a major oil and gas auction in the Democratic Republic of Congo (DRC) at the end of July. In letters sent to oil companies worldwide, Greenpeace warns of an ominous auction at the expense of biodiversity and global climate. The massive auction – fiercely opposed by local communities – overlaps peatlands and several Protected Areas.

Yesterday, DRC’s Oil Minister Didier Budimbu announced the auction covers 27 oil and three gas fields, exceeding the government’s decision in April, potentially without a legal mandate. The April plan encompassed an area more than 240,000 km² – an area about 300 times the size of Nairobi. The decision came only five months after the signing of a $500 million deal at the COP26 to help protect DRC’s forests with the Central African Forest Initiative (CAFI).

“This auction not only makes a mockery of DRC’s posturing as a solution country for the climate crisis – it exposes Congolese people to corruption, violence, and poverty that inevitably come with the curse of oil, as well as more heat waves and less rains for all Africans, said Irene Wabiwa, International Project Lead for the Congo forest campaign at Greenpeace Africa. 

In a field trip last week to four of the designated oil blocks, Greenpeace Africa’s forest campaigners collected testimonies from local communities that were all shocked about the prospective auction of their lands to oil companies. Some communities, such as those living around the Upemba national park, see the prospective oil exploration as a direct threat to the lake they rely on for generations and are planning to resist it.

In a letter sent to oil and gas companies in Africa, Europe and the US, Greenpeace warns of oil blocks overlapping carbon-rich peatlands. In a recent article, Prof. Simon Lewis of the University of Leeds notes four blocks overlapping peatlands that store 5.8 billion tons of carbon – that is equivalent to more than 15 percent of global energy-related CO2 emissions in 2021. According to the International Energy Agency, any new fossil fuel project today would undermine reaching net-zero emissions by 2050 and this auction would be particularly toxic. 

“The international community and the Congolese government must end the neocolonial scramble for African fossil fuels by restricting oil companies’ access to the DRC, focusing instead on ending energy poverty through supporting clean, decentralised renewable energies” added Irene Wabiwa.

Contrary to repeated claims by Minister Budimbu that none of the oil and gas blocks to be auctioned lies within Protected Areas, official maps show that nine do.  The Minister acknowledged his miscommunication on 13 June. Following the augmentation of the auction, the updated number of blocks overlapping Protected Areas may be as high as 12. 

It remains unclear which oil companies are planning to bid in the auction. In a petition launched by Greenpeace with local and international partners, almost 100,000 people call on Congolese President Felix Tschisekedi not to sacrifice the rainforest to the oil industry.

This auction is taking place in the midst of a new global scramble for African fossil fuels reserves, from West African gas, through East African oil, even to importing South African coal

Greenpeace Africa calls on governments in the continent to put the interest of their people over the greed of rich nations and their multinational corporations by accelerating investments in renewable, clean and decentralised energy. And urges  all oil and gas companies to refrain from participating in the neocolonial scramble for African fossil fuels.

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Waste incineration and ‘recycled carbon fuel’, putting stokes in the renewable energy wheel

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Today the Committee on Industry, Research and Energy (ITRE) – European Parliaments’ lead committee on the revision of the Renewable Energy Directive (RED) – called for the Member States to take measures to ensure that energy from biomass is produced in a way that minimises distortive effects on the raw material market and harmful impacts on biodiversity, the environment and the climate. To that end, Member States shall take into account the waste hierarchy and the cascading principle.

As part of the measures, it requires the Member States to terminate support for the production of energy generated from the incineration of waste if the separate collection and the waste hierarchy obligations outlined in the Waste Framework Directive have not been complied with. 

Janek Vähk, Climate, Energy and Air Pollution Programme Coordinator: “Although a step in the right direction, the proposed criteria is a weak qualifier, given that, at incineration plants, the ‘biodegradable waste’, is never combusted without fossil-derived materials present. Thus, it remains possible for ‘renewable energy’ to be generated while emitting large quantities of fossil-derived CO2. Incineration plants are already the most carbon intense source of power in some Member States”. 

Vähk added, “We call for the criteria for the use of wastes to be improved so that no support for renewable energy is offered for the combustion of mixed waste”.

The committee also has decided to keep recycled carbon fuels – i.e. potentially plastic based fuels – as part of the Renewable Energy Directive, allowing non-renewable energy sources to contribute towards the EU renewables targets.  A recent study showed that plastic-derived fuel produces higher exhaust emissions compared to diesel. 

Lauriane Veillard, Policy Officer on Chemical Recycling and Plastic-to-Fuels: “Why does the European Parliament keep recycled carbon fuels as part of Renewable Energy Directive, when the definition itself recognizes the non-renewable sources of these fuels? This is greenwashing and will strongly undermine efforts to decarbonise the transport sector. We call on co-legislators to fully exclude the use of fossil based-fuels as part of the RED.”   

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