Looking towards the EU Clean Industrial Deal
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The forthcoming EU Clean Industrial Deal due at the end of February is a key document – what will it contain and what should it contain?
The Clean Industrial Deal and accompanying Affordable Energy Action Plan are among the most widely awaited of the legislative actions of the first 100 days of the incumbent European Commission.
As part of a strategy to decarbonise industry while strengthening its global competitiveness – of which affordable energy is a key – little information about its content has been released officially so far.
European Commission President Ursula von der Leyen gave some insights speaking at the World Economic Forum in January.
Also of interest
Clean tech at heart of Europe’s competitiveness strategy
“Not only must we continue to diversify our energy supplies, and expand clean sources of generation from renewables and, in some countries, also from nuclear. We will have to invest in next-generation clean energy technologies, like fusion, enhanced geothermal, and solid-state batteries,” she said.
She continued: “We must also mobilise more private capital to modernise our electricity grids and storage infrastructure. We must remove any remaining barriers to our Energy Union. And we must better connect our clean and low-carbon energy systems. All of this will be part of a new plan that we will present in February.”
The European strategic advisors Publyon also offer some insights, suggesting the Clean Industrial Deal will seek to streamline regulatory processes and foster a market for clean technologies.
It will also outline measures for simplifying planning, permitting and tendering, backed by substantial investments in renewable energy, hydrogen networks, CO2 transport infrastructure and digitalised energy systems.
Supporting hydrogen a no-regret policy
What then are some of the specifics being looked for?
A position paper from Hydrogen Europe points to Europe’s hydrogen ecosystem as providing the necessary flexibility to renewables and helping to decarbonise energy, transport and industrial sectors still relying on fossil fuels whilst reducing strategic dependencies.
But it still requires improved market conditions to lower costs and increase global competitiveness, the organisation states, and a clean industrial deal addressing market failures, simplifying regulations and catalysing private sector investment is urgently needed.
Hydrogen Europe points to almost twenty recommendations in areas including delivering affordable energy and critical raw materials, incentivising demand for EU sustainable products, strengthening funding and developing skills.
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Flexibility contributes to competitiveness and affordability
In a paper the business association SmartEn has set out to highlight the significant role of the flexible demand management industry – including both technology and service providers – in contributing to the competitiveness and affordability objectives.
In particular, activating flexible consumption of clean electricity from energy end-users can reduce wholesale electricity prices for all, avoid unnecessary investments and decrease the total system costs of the clean energy transition and allow flexible consumers to reduce their electricity bills and get extra revenues, SmartEn points out.
To achieve this, the flexible demand management industry must be recognised as a distinct clean tech sector, not properly addressed in the EU Net-Zero Industry Act, to help scale profitable flexibility business models across Europe. It must also ensure that all consumers, from households to large energy intensive industries, are rewarded for activating their demand side flexibility and contributing to a competitive and affordable clean energy transition.
An electrification bank
Pointing to industrial electrification not picking up in Europe due to high upfront investments, long investment cycles, increased energy costs, unfair taxation and ongoing fossil fuel subsidies, Eurelectric has proposed to incentivise it with the establishment of an ‘Electrification Bank’.
This bank is not envisaged as a new investment firm, but rather as a comprehensive ‘one stop shop’ financing instrument centralising expertise and new EU and member state funding opportunities.
Eurelectric also suggests in its position paper that the allocation of funds should differentiate between industrial consumers based on their heat processes to ensure a fair competition among bidding projects, with separate auction calls for industries with low-to-medium-heat processes (below 500°C) – such as chemicals, transport, food and beverage that already have access to large-scale heat pumps or electric boilers – and those with higher temperature heat processes – such as cement, steel, glass and iron that may need more innovative electrified solutions.
Specifically on the affordable energy action plan, Eurelectric in a separate paper highlights the need for deploying massive homegrown renewables to displace fossil fuel imports, boosting electrification to reduce system costs by spreading the investment across more consumers and developing long-term contracts such as PPAs and contracts for difference.
Eurelectric also mirrors SmartEn in calling for mainstreaming flexibility and indicates the need for implementing the electricity market design reform.
Originally published on Enlit World.
