REPowerEU – Policy supporting rapid results

German Economy Minister Robert Habeck made headlines last week when he announced a plan to achieve a grid powered entirely by renewables until 2035, 15 years earlier than the previous target of the country. Called REPowerEU, this major acceleration was largely a response to the twin crises of global energy prices and Russia’s invasion of Ukraine. Germany’s decision is a powerful decision, because renewable energies offer significantly greater security of supply, in addition to the advantages that clean energy brings in terms of costs and sustainability. Moreover, being the 4th largest economy and largest GDP in the European Union, the investment that needs to take place in the country will result in a great source of growth for the European bloc.

Now is the time for the European Union to share its more ambitious plan for the energy transition. Ursula von der Leyen, the first female President of the European Commission, is at the center of this potentially defining moment in global climate and energy policy. From her first day in office, she has made it clear that tackling climate change is a top priority. It was on International Women’s Day that von der Leyen announced an EU-wide strategy, with the main aim of lifting the bloc out of the constraints of Russian fossil fuel dependence.

The Commissioner unveiled a three-pronged strategy, focused on diversifying its supply of LNG as a transition fuel, investing in renewables and emphasizing energy efficiency, which the IEA and the EU qualify as the world’s “first fuel” in our energy transition efforts. system. President von der Leyen has an impressive background and career. She is both a doctor and an economist, a mother of seven, she served in former Chancellor Angela Merkel’s cabinet from 2005 to 2019 – the longest serving member of the cabinet – and is now responsible for legislation that concerns more than 700 million Europeans.

The EU imports 90% of its natural gas, with Russia supplying about 45% of current demand; in 2021, this was equivalent to 155 billion cubic meters (bcm). Russian oil and coal also provided about 25% and 45%, respectively, of EU imports. REPower EU puts energy efficiency, heat pumps, hydrogen and solar roofs at the center of attention. The plan has two main objectives: first, to diversify gas supplies (via greater LNG imports and pipeline imports from non-Russian suppliers, and higher levels of biomethane and hydrogen), and second, to further reduce rapidly Europe’s dependence on fossil fuels. Homes, buildings and industry as well as the electrical system must drive energy efficiency gains, increase the share of renewable energy and resolve infrastructure bottlenecks.

The new plan aims to solar roofs to charge about 15 TWh in a year, which would require adding 7 GW of behind-the-meter solar panels to the system. For reference, according to PV Tech, in 2021 nearly 26 GW of solar energy was added to the grids of the 27 EU Member States, bringing the total installed capacity (which is mainly composed of scale) to almost 165 GW.

As for heat pumps, REPowerEU wants to drive the front loading of adoption, so that 10 million units are installed over the next five years, which could save 1.5 billion cubic meters over the next 12 months. An effective short-term solution is energetic efficiency for homes, target thermostats for building heating to be lowered by 1 degree Celsius, which could save 10 billion m3 of natural gas. REPowerEU is also adding an additional 80 GW of renewable energy to be added by 2030 to support the additional generation of green hydrogen.

As Cathie Wood often says, innovation solves problems

Putin miscalculated the strength of alternatives to fossil fuels and the ability of the European Union to accelerate its transition away from this energy. Meanwhile, critics point out that the current duration of stationary battery solutions is no more than four hours and that the EU does not have enough minerals to produce all the batteries, solar panels and wind turbines needed for the transition. They also state that the EU will not continue to observe the deflationary trends that have lowered the costs of solar panels and batteries predictably over the past 40 years, and that renewable energy would take up too much land, and that the wind and solar are intermittent and therefore unreliable.

But that ignores the fact that the US Department of Energy, the International Renewable Energy Agency, the International Energy Agency (established during the 1973/74 oil crisis) and several premier institutions plan have paved the way for a green network. The solutions are in place. Professor Philip K. Verleger’s article last week could very well hit the bull’s eye, with its hopeful headline “Putin Could Save Us From Global Warming”.

I expect most analysts to agree with me that Europe now has, without a shadow of a doubt, the most ambitious green targets on the planet. But aiming high alone does not result in change. What sets Europe apart is the depth and breadth of its policy instruments that can enable a rapid scale-up of transformative investments that will deliver a new energy system. In a moment of crisis, Europe is resolute and committed to a future independent of fossil fuels from Russia.

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