When confronted with energy price explosions and the climate crisis, the EU cannot waste time and money on castles in the air. Instead of betting on unproven solutions far from market introduction, such as small modular reactors and the broad deployment of all kinds of carbon removal technologies, the EU should build on what works right now. Renewable energy sources have proven to be by far the most relevant and reliable solution. In our new 100% Renewable Action Plan for the next European Commission, the Heinrich-Böll-Stiftung European Union and Environmental Action Germany (Deutsche Umwelthilfe) describe what needs to happen after the 2024 European elections to harvest the benefits of renewables. Jörg Mühlenhoff reports.
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The climate crisis and energy price explosion have made it clear: the EU cannot afford its dependency on fossil fuels anymore. How to deal with these enormous challenges? First, when it comes to the climate crisis, the von der Leyen Commission has put forth its flagship project, the European Green Deal. Launched in November 2019, it includes more than 110 new legislative initiatives and action plans that prepare the EU for reaching net zero emissions by 2050.
Second, when it comes to the fossil fuel price crisis, the EU and its Member States have also put forth a whole range of measures. The EU Agency for the Coordination of Energy Regulators (ACER) counted more than 400 different emergency measures in reaction to the sharp rise of energy prices since the end of 2021. Two-thirds of them just subsidise energy consumption through direct payments to consumers or cut taxes on energy. Although the EU committed to gradually phasing out fossil fuel subsidies, public support for fossil fuels in 2022 reached an all-time high of €123 billion.
Each EU Member State is still free to bolster those energy sources when considered as a national priority, at the risk of undermining the EU-wide emission reduction target. There are no binding national targets in this joint exercise. EU capitals just have to send National Energy and Climate Plans (NECPs) to Brussels in order to report about how they contribute to the EU target. A look into the most recent NECPs shows that when it comes to cutting CO2 emissions, EU Member States employ different methods. While some promote nuclear energy, or hope to simply offset their emissions by counting the carbon sink of their forests, others focus on carbon capture and storage (CCS) to absorb CO2 from the atmosphere. Renewables do play an important role in these plans, but in order to reach targets, their role would have to be more prominent. And only few Member States plan relevant energy savings. It is therefore not a surprise that under the current national plans, the EU will fail to reach its climate targets.
From patchwork to priorities?
EU climate and energy policies resemble more a patchwork than a masterplan. The EU Treaties’ subsidiarity principle clearly gives priority to an adequate balancing of the local, the national and, only then, the supra-national EU competences. But these theoretical considerations ignore the time dimension. We are in a climate emergency. Delaying the right action will only increase the costs of inaction. Modelling from the European Central Bank’s stress test expects up to 10% reduction of the EU’s gross domestic product and almost a third of loans would not be paid back because of companies’ losses from climate damage. On top of that, the EU is in sharp global competition with the US and China on leadership in clean energy technologies. Both the US and China are currently faster and more successful in attracting companies and scaling up technologies.
As the EU is clearly lagging behind in terms of climate action and investments, it is crucial to avoid wasting more time and money on the wrong solutions. With regard to renewables, fossil fuel use with CCS or nuclear, should we follow all these three pathways or prioritise?
Carbon capture in the energy sector: a pipe dream
CCS technologies promise to absorb CO2 from the atmosphere and then store it permanently, for instance in underground geological formations. There are governments and European Commission scenarios that consider CCS as an option for reducing emissions while keeping fossil fuels in the energy mix. In certain industries, deploying CCS can make sense because even when the production of certain chemicals or of cement runs on zero-emission energy, the chemical processes involved inevitably still emit carbon.
However, around three-quarters of EU greenhouse gas emissions do not stem from these industries but from burning fossil fuels for electricity, heating and mobility. When it comes to this energy supply, the potential of CCS to mitigate emissions is negligible. CCS applications require a sufficiently high concentration of CO2 in the flue gas, limiting their deployment to big coal power plants or fossil gas turbines. For the more significant emissions from small boilers that burn fossil gas and oil for heating buildings, CCS technically cannot be applied anyway. Likewise, CCS cannot tackle the big chunk of fossil fuel emissions from cars and trucks with internal combustion engines.
Currently, no single commercially operating plant is equipped with a successful CCS application. Imagine CSS technology went into mass production during the next few years and was deployed at all fossil fuel–fired plants in the EU. This would have no meaningful impact on EU emission reduction targets because almost all Member States already have plans to shut all coal power plants at the latest around 2030 anyway. After the historic price hikes of 2022, the use of fossil gas for electricity generation likewise is in strong decline. The entire infrastructure for transporting CO2 from fossil fuel–fired plants to the place of storage, e.g. under the North Sea, is inexistent. It is highly questionable if an investment in CCS could ever pay off for plant operators – unless subsidised by public funds. The only thing we know for sure is that CCS would lock the EU into fossil fuels with a stable level of CO2 emissions.
Nuclear: too late, too little and unreliable
The rule of thumb for building new nuclear reactors in Europe – be it in Olkiluotto in Finland, Flamanville in France or Hinkley Point in the UK – goes as follows: the construction is roughly three times longer and more expensive than expected. Since the late 1980s, the nuclear industry (not only in the EU) struggles to convince the finance sector of its viability. Bankers know very well the risk that future revenues from selling nuclear power might not be sufficient to refinance the gigantic capital expenditures. Commission President von der Leyen herself highlighted the lack of finance for the technology at the worldwide nuclear summit in Brussels on 21 March 2024. Even when ignoring the environmental and health hazards, and even if the industry raised the capital, the long construction periods and the lack of trained staff would slow down the buildout. In the best case, the nuclear industry would just replace aging reactor capacities that will shut down.
The European Commission’s new climate and energy scenarios for the 2040 emission reduction target all show that nuclear energy becomes rather marginal. This is valid for the EU’s energy mix, as well as for the contribution to emission reduction targets, despite the very optimistic assumptions on the nuclear industry’s capabilities in the Commission’s scenarios. Finally, yet more importantly, the almost total dependency of the EU on uranium imports creates additional geostrategic risks, with almost half of the nuclear fuel currently still coming from Russia or its ally Kazakhstan. The concept of Ssmall modular reactors will not change this picture. Their technology readiness is low and investors have quit after first projects failed technically and commercially.
Renewables have cut emissions…
The supply of domestic renewable energy more than doubled between 2005 and 2022 in the EU. Investments increased by more than 80% since 2019, reaching €330 billion in 2022. Looking back on the curves of European carbon emissions over the past decades, the European Environment Agency shows that the growth of renewable energy caused the biggest drops in emissions, together with declining energy demand from emission-intensive industries. More and more electricity from solar panels and wind turbines replaced dirty coal power and fossil gas. The quick switch of the big polluter nations like Spain and Germany to renewables was particularly effective in view of the EU climate target. The CO2 footprint of the EU electricity grid was cut in half, from 501 grams of CO2 emissions per kilowatt-hour in 1990 to 251 grams in 2022.
…and boosted EU economies
Solar and wind power have become the cheapest source of energy supply in almost all EU regions by now. Furthermore, they brought us through the fossil gas price crisis. Their price-dampening effect on wholesale electricity markets has slowed down inflation in the EU. The International Energy Agency’s 2022 assessment of EU electricity markets shows that prices are the lowest whenever the share of renewables is the highest and the share of gas the lowest.
By switching entirely to domestically produced renewable energy, Europe will become more resilient to geopolitical crises, preventing its energy supply being weaponised by foreign governments, and build up local value chains. These already pay off. Investing in renewables means that the purchase power stays, in particular, in the rural and disadvantaged regions, and creates local benefits, tax revenues and employment. There were 1.5 million EU citizens working in the renewables sector in 2021. Implementing current policies alone will at least triple employment in the sector. Solar and wind energy are the most employment-intensive energy technologies.
To be on the safe side, those who take both the climate crisis and the energy price crisis seriously should make their choice. Economics and urgency clearly speak in favour of the most mature solution we already benefit from: our domestic renewable energy sources. A 100% renewable EU is thus the way forward.
The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.
