electrificationstrategy.eu @AllElectricEU May 2020

ElectrificationStrategyEU - Position

Electrification is possible in virtually every sector of the economy. From agriculture and transport, to health and manufacturing. Technical solutions are ready to be implemented, and innovations are within reach. Electrification is the most affordable energy transition solution overall.

Where there is demand, there is supply.

By focusing efforts and policy incentives on the demand side of electrification, the EU can effectively unlock markets and enable innovation. Crucially, this will lay the foundations for a cost- and time-efficient development of a new generation and distribution of electricity. Although the EU Electrification Strategy should not become convoluted by old-school thinking about how, where and when renewable electricity is used, produced and delivered, these are central to solving the consequences of the increased demand.

All electric Europe is a connected, innovative and thriving market economy.

The EU Electrification Strategy will be the key enabler in delivering a robust European Green Deal.

It will create a path for the immediate deployment of available technologies that can decarbonise the transport and heating & cooling sectors. It is the most energy efficient and cost-effective way to mitigate climate change and improve the lives of all Europeans.

The EU Electrification Strategy will combine with industrial strategy ensuring research, innovation and progress towards the EU’s industrial leadership for a carbon neutral, connected, and just global economy.

An ambitious EU Electrification Strategy will effectively support sector- integrated digital economy from the energy networks towards other non- energy sectors like health, retail and agriculture. It will streamline investments from electricity infrastructure, such as smart electricity grids, all the way downstream towards a carbon neutral economy in the regions and the Member States.

In the European Commission's "A Clean Planet for All”, electrification is both an essential and an understated ingredient in the recipe for a carbon neutral Europe. National studies demonstrate how electrification alone can bring the cuts in emissions needed for the achievement of 2030 goals, and with a push, deliver carbon neutral societies by 2050. The European Green Deal gives us the foundation of Europe needing to double the share of electricity in total energy consumption by 2050.

What can be electrified?

Every year unveils new activities for electrification. The fact that heating can be generated by electricity is old news, but the reduced cost of electricity from new renewable sources combined with the use of heat pumps can make electric heating a feasible, clean and economic solution for thousands of Europeans who today use fossil fuels for heating.

Beyond electric cars, electrified transport solutions are booming. Almost 80 electric sea ferries will be in operation along the Norwegian coast by the end of 2022. Seven electric sea ferries are in operation today bringing cars and people across the fjords. In 2010, the most technology positive NGO estimated that perhaps half of the 125 ferry lines could be electrified. In 2020, the Norwegian government believes that all ferries could run on electric power by 2025.

Not many years ago no-one believed aviation could be electrified. Now we know that it can, at least for short-haul flights. The question is no longer whether you can buy a plane ticket and fly with an electric plane this decade, the question is whether it will happen during the first or the second half.

European oil and gas industries produce most of their oil and gas at sea, far from the grid. Still as an example, the Norwegian oil and gas industry has set an ambition of producing almost without emissions by 2050. Electricity from the grid will be used and it will be the

most important measure to cut emissions. The end product is natural gas, but it is setting an example for business worldwide: - Cut your own emissions.

If you can electrify ships, planes and oil platforms, most things can be electrified. A study done by Eurelectric and McKinsey in 2018 shows that Europe can reduce 95 % of its GHG emissions in 2050 compared to 1990 through deep electrification of all activities.

In manufacturing, the majority of emissions are related to heat production and utilisation. An estimated 90% of industrial thermal processes in Europe are powered by non-electrical energy such as gas, coal and oil. Existing electrical industrial heating methods save energy, as the energy required is used more effectively and in a more targeted manner. Switching the most energy-intensive industries in Europe from fossil fuel to electricity would save 5 billion tons of CO2 by 2050 (on average up to 150 million tons per year, which is more than 3% of total EU annual emissions). Moreover, electrical industrial heating technologies facilitate the integration of renewables

Will it be very expensive?

Initial investment needs will be substantial; therefore, a strategy is clearly needed. But electrification is first and foremost an opportunity: Electrification is the single most important measure to reduce energy consumption, reliance on fossil fuels, emissions, and last, but not least, energy cost. At the same time, it will create jobs.

Electric engines are far more efficient than combustion engines. While combustion engines convert about 30 percent of energy into motion, an electric engine converts 90 % of energy into motion. Electric cars will, within a few years, cost the same as fossil fuel powered cars and in the longer term they will be cheaper. When electric cars and fossil fuel powered cars cost the same you can, due to energy efficiency, for every fossil fuel car you replace with an electric car, spend more than 200 Euros per year on grid investments without ending up worse off (DNV GL 2019).

More efficient grid operations made possible by digitalisation, battery storage and flexible demand will also bring new opportunities to operate grids more efficiently, and there will be more business customers to split the cost burden.

What is the business case?

By electrifying first, Europe can drive research and business development across the continent, instead of importing technologies. Europe should be the definer of electrification standards. The EU Electrification Strategy should go beyond electrification targets, and shift towards green taxes, measures to deploy renewable energy and develop grids. It should include a business strategy for driving and investing in research and innovation, to develop new green industry and to create jobs.

The EU electrification strategy will deliver an All-Electric Europe. Today, we can only see the contours of this electric future. However, the contours of today, we can clearly assess and propose solutions to the obstacles that stand in our way.