Europe’s mild winter weather may give skiers a tough time on the slopes, but the rest of the continent is breathing heavily.
Except for the cold snap in December, most of Europe has enjoyed unseasonably high temperatures during this season. And with Spring now in sight, we may avoid an energy crisis that could cause serious disruption to industry and millions of households across Europe.
Over the past months, Europe has taken steps to transform consumption, fill gas storage facilities, and optimize coordination. However, the harsh winter will be a significant challenge for everyone.
To find out, we must make a concerted effort at the beginning of 2023 to ensure that energy security is not left behind in the future and in the years to come. It would be foolish to continue to rely on the weather to save a European energy system that is heavily dependent on foreign fossil fuel reserves.
Today, nearly 80% of the world’s energy needs are met by fossil fuels.
If ever there was a time to change course and radically reshape how we produce and use energy, it is now. The tragedy of the invasion of Ukraine is the latest in a wider series of crises that have oil and gas implications as a common factor.
2023 is the year to finally break the cycle, through sustained investment and innovation in clean energy and electricity generation networks.
That’s why at Iberdrola, we have identified five clear areas for action this year – five foundations for faster progress towards green energy security.
Turbocharging the deployment of renewable energy
Wind and solar farms are an increasingly common sight, but the work of decarbonizing power plants is still a long way off. Even the UK, where great progress has been made in the deployment of renewable energy in recent years, will still rely on gas and coal for 40% to 50% of the electricity generation mix by 2022.
One of the biggest obstacles to adding renewables to the energy mix remains planning and enabling. To date, too many countries have announced their renewable energy targets and ambitions without considering the wider context. We need more than rhetoric. We need mechanisms to deliver renewable energy, which must be included and prioritized in policy planning and the environmental permitting process.
More renewable energy generation is needed, but if the electricity grid that carries this clean energy is useless, the investment is worthless. We need sustained and well-planned investment in these networks.
Modernization of the electricity network
Globally, renewable energy generation will increase fivefold by 2040. Electricity demand levels will also increase due to the use of electric cars and low-carbon heating. In the US alone, the electricity grid must be expanded by at least 60% by 2030. Based on historical developments, this represents work that must be completed in less than ten years.
The electricity grid is the backbone of heat delivery and electricity transport – the glue that holds our energy system together. Again, planning and permitting are the main culprits in the lag so far. Regulators overseeing energy networks around the globe are increasingly aware that they need to be more nimble, more far-reaching, and more willing to accept “no regrets” investments – but there is still room for improvement.
Green hydrogen
This fuel, which is important for decarbonizing the main part of heavy industry and the transport sector, has become a hot topic of conversation. Now is the time for meaningful action to expand the deployment of hydrogen produced from renewable energy – the only sustainable type (and increasingly competitive compared to blue or gray hydrogen, produced from fossil fuels).
For green hydrogen to help sectors like ammonia or methanol production decarbonize, it must be given a level playing field. Green hydrogen is currently more expensive to produce (from renewable energy) than gray hydrogen (from fossil fuels). However, gray hydrogen comes at the cost of high carbon emissions and makes us dependent on fossil fuels.
Innovativeions
The importance of innovation at scale to accelerate the deployment of renewable energy, grids, electric vehicles, and optimal energy storage systems cannot be understated. At Iberdrola, we recently published a plan to double our innovation spending by 2030.
Encouragingly, the International Energy Agency recently said that global government energy research and development spending will be 5% higher in 2021 than in 2020. This is still not enough. Companies and governments must continue to be courageous, despite a tougher recessionary environment and tight investment conditions.
Finally, we must be careful about the long-term rewards of decarbonisation. 2022 is characterized by short-term, reactive, and often unpredictable government interventions in energy markets: confusing wind taxes, cliff-edge price support schemes, and a return to old, destructive technologies at the eleventh hour.
2023 should be different. This is the year to show leadership, determine, and set us all on a sustainable path out of the crisis caused by excessive dependence on fossil fuels.
To protect our citizens and our economy in the future, we must rely on better judgment, rather than luck.
Iberdrola is the chief executive of Iberdrola.
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