The Future of Energy Supply

The European Union places great emphasis on renewables in its energy policy strategy, reflected in commitments made under the Paris Climate Agreement, as well as in the previously mentioned European Green Deal and Fit for 55 directives. The primary goal is for Europe to become the first climate-neutral continent by 2050. The specific guidelines to achieve this are contained in the Renewable Energy Directive (RED).

The main objective of the RED III directive is to set a minimum share of 42.5% for renewable energy in the energy mix by 2030, followed by achieving full carbon neutrality by 2050.

Distribution of Renewable Energy Sources (2022)

The 42.5% target is a crucial indicator but difficult to interpret alone, so the RED outlines sector-specific rules and goals to reach this value. Generally, these aim at the electrification of various sectors, energy R&D, and the spread of alternative fuels. Some specific directives include:

• To promote renewable energy production and maintain the EU's competitiveness, at least 5% of newly installed renewable energy capacity by 2030 must come from innovative renewable energy technologies.
• By 2030, annual sustainable biomethane production should reach 35 billion cubic meters, supporting supply security and EU climate policy efforts. Biomass waste must be converted into biomethane in proper biogas plants instead of being sent to landfills.
• The principle of cascading use of biomass must be introduced, prioritizing wood-based products, extending their lifespan, reuse, recycling, bioenergy, and disposal.
• The development goal for offshore renewable energy is to produce 300 GW of offshore wind energy and 40 GW of ocean energy by 2050.
• Buildings and the construction industry play a significant role. To meet commitments, building heating and cooling must be decarbonized, mainly through electrification, heat pumps, modern building materials, and insulation. By 2030, at least 49% of energy consumption in the construction sector must come from renewable sources.

As seen above, the RED directive contains detailed descriptions of the indicative share of renewable energy in very different sectors and the related specific tasks. In this article, we highlight two critical areas relevant to our activities: energy system integration and the renewable hydrogen strategy.

The EU Strategy for Energy System Integration addresses the problem of energy production and consumption occurring in separate infrastructures with different value chains. This system is not suitable for providing cost-effective solutions to achieve climate neutrality. The goal is to connect these infrastructures, increase efficiency, and build relationships between sectors so that the energy system can function as an integrated whole.

The strategy is based on three main pillars:

• Creating a circular energy system focused on energy efficiency, effectively using local energy sources, such as channeling industrial waste heat into residential use.
• Increasing direct electrification for end-users. Given the high share of renewables in the electricity sector, it is essential to exploit this potential, for example, through the installation of heat pumps, electric melting furnaces, and electric vehicles.
• Replacing traditional fuels with clean ones in hard-to-electrify sectors (e.g., steel production, transport). Examples include renewable hydrogen, sustainable biofuels, and biogas.

Hydrogen is a very light and highly explosive gas, typically produced from methane. So, how can it help the economy become green?

In an integrated energy system, hydrogen can significantly facilitate the decarbonization of industry, transportation, and energy production, especially in sectors where direct electrification is economically or technically unfeasible, like steel production or maritime transport.

Hydrogen also plays a crucial role in achieving EU supply security, as the electricity needed for hydrogen production can be locally generated from renewables, reducing the need for fossil fuel imports. Expanding wind and solar energy capacities will be critical here.

Furthermore, hydrogen can mitigate the weather dependency of renewable energy sources (primarily solar and wind) when used for energy storage. Excess electricity can be channeled into hydrogen electrolysis during overproduction, and during shortages, hydrogen can be converted back to electricity in a fuel cell.

The grand plans include producing 10 million tons of renewable hydrogen annually in the EU and importing another 10 million tons by 2030. The detailed rules for this are outlined in the EU Hydrogen Strategy, which describes the investments, regulations, and research and development incentives needed to achieve these goals.

From the above, it is clear that these investments require significant financial resources. Thus, substantial financial contributions are needed at both the Union and member state levels to transform the energy sector. The EU's cohesion fund has allocated 37% of its budget for the 2021-2027 cycle, amounting to EUR 15.7 billion, for investments in renewable energy sources. The European Connecting Europe Facility Program allocates EUR 8.7 billion for energy network development and EUR 3 billion for digital convergence. These are just two examples of the many funding forms available.

The second critical challenge is the development of technologies. For instance, 96% of currently produced hydrogen is made using traditional natural gas reforming technology, which involves significant CO2 emissions. While electrolyzer cells have existed for a long time, hydrogen-powered vehicles are still limited, often only as prototypes. The same applies to hydrogen infrastructure.

The third challenge is developing IT systems. The spread of renewable energies brings new legal regulations, such as proving that renewable energy was used to produce the generated hydrogen. From 2030, the quantities produced will need to be reported to the relevant authorities on an hourly basis, adding an administrative burden to businesses.

This also includes the GHG (Greenhouse Gas) calculations and CBAM (Carbon Border Adjustment Mechanism) regulations for all renewables, which determine the exact amount of CO2 emissions an energy-producing unit is responsible for over its lifecycle. This cannot be achieved without a robust IT infrastructure.

Of course, the third challenge mentioned above is where Alias Innovations' expertise truly lies. As we have stated in numerous places, we began our operations by automating the certification processes for biogas, and over the years, we have accumulated significant experience in practically managing the arising issues.

Furthermore,we understand that the world does not stand still, so alongside optimising our existing services, we have embarked on developing new ones, such as the GHG calculation module. In the future, we will place great emphasis on administrative and IT developments related to hydrogen.

If you are interested in greening your company's IT infrastructure or learning about upcoming regulations related to renewables, feel free to contact us!