ENERGY SECTOR European Commission sets out its plans for the future of energy systems

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The European Commission has set out its plans for the energy system of the future and clean hydrogen. If Europe is to reach its goal of carbon neutrality by 2050, it needs to completely transform its energy system, which currently accounts for 75% of the EU’s greenhouse gas emissions.

Now, two strategies adopted in early July will pave the way towards a more efficient and interconnected energy sector, driven by the goals of a cleaner planet and a stronger economy.

The Commission’s two strategies present a new clean energy investment agenda which are in line with the European Green Deal and its Next Generation EU recovery package. If successful, the planned investments could help stimulate recovery from the COVID-19 pandemic by creating European jobs and boosting competitiveness in strategic industries.

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Energy system integration

The first strategy, the EU Strategy for Energy System Integration, will create the framework for the transition to green energy. Under the current model, where energy consumption in areas like transport, industry, gas, and infrastructure is taking place in ‘silos’, cannot deliver climate neutrality in a cost-efficient way. This is because the changing costs of innovative solutions need to be integrated in the way we operate our energy system.

Energy system integration means that the system is planned and operated as a whole rather than in distinct parts. This links different infrastructures, energy carriers, and consumption sectors to improve efficiency and drive down costs. This means, for example, that energy harvested from solar panels could end up in electric cars, for example, while a factory could be fuelled by clean hydrogen produced by offshore wind farms.

The Commission sets out 38 actions to create a more integrated energy system using this strategy. These include the revision of existing legislation, financial support, research and development of new technologies, the issuing of guidance to EU Member States, and market governance reform.

Hydrogen strategy

The Commission’s second strategy is that for an integrated energy system where hydrogen supports decarbonisation. The EU Hydrogen Strategy addresses how to make this a reality through investments, regulation, market creation, and research and innovation.

Hydrogen can also power sectors that aren’t suitable for electrification and provide storage to balance renewable energy flows. This, however, can only be achieved via coordinated action between the public and private sector at EU level, says the Commission.

Under this strategy, the priority for the Commission is to develop renewable hydrogen in the long-term through wind and solar. In the short and medium term, however, other forms of low-carbon hydrogen will be required to rapidly reduce emissions and support the development of viable new markets.

To help deliver on this strategy, the Commission launched the European Clean Hydrogen Alliance with industry leaders, the European Investment Bank, and national and regional ministers. The Alliance will build an investment pipeline for scaled-up production and will support EU demand for clean hydrogen. The Commission will also propose policy and regulatory measures to boost investor certainty, ensure the uptake of hydrogen, and promote the necessary infrastructure and logical networks required.

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Commissioner for Energy Kadri Simson, said: “With 75% of the EU's greenhouse gas emissions coming from energy, we need a paradigm shift to reach our 2030 and 2050 targets. The EU's energy system has to become better integrated, more flexible and able to accommodate the cleanest and most cost-effective solutions. Hydrogen will play a key role in this, as falling renewable energy prices and continuous innovation make it a viable solution for a climate-neutral economy.”

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