10 current energy & climate topics in the spotlight

1. Climate: continuing to burn fossil fuels can prove to be expensive

Today, in Europe, 25-60 billion euros worth of fossil fuels are imported every single month. For those fossil fuels, we are completely dependent on foreign countries, as the recent Russian gas crisis has shown us. Where solar and wind power were once expensive, almost unaffordable projects, they are currently cheaper than electricity from coal or gas. If Flanders or Belgium decides not to participate sufficiently in climate action, that may seem cheaper in the short term; in the long term, however, it won’t do our wallet any good, as we will have to buy emission certificates and catch up after all.

2. Industry: there is a need for a strategic master plan

Belgium may be a small country, but within Europe it has a large industrial sector in permanent need of a lot of energy. The petrochemical industry, metal production (such as steel and aluminum) and ports form the core of this sector. Wallonia has an important cement industry. The food industry and many SMEs also consume large amounts of energy, while data centers are a growing source of energy consumption.

Intense competition puts the petrochemical and steel industries in Belgium under pressure. The United States and China are aggressively supporting climate investments, increasing international competition. Even within Europe there is strong competition. The question at hand is how to address this pressure on our industry. It is essential to have a well-thought-through master plan that indicates whether and how we want to support certain industrial activities with public money. Although some political parties have proposals to protect industrial competitiveness, this is really a matter that is mainly discussed at the European level. It is a complex topic that is rarely addressed in party programs, and – even if it is – is certainly not quantified.

3. Electricity infrastructure: investments are needed and are needed quickly

Electric cars, heat pumps, as well as new industrial processes, will demand much more electricity than is demanded today. Our overall energy consumption will decrease, but electricity demand will have to double or triple. EnergyVille calculated that a substantial expansion of electricity infrastructure is needed to keep energy bills affordable and electricity supply reliable. In past years, we have seen how challenging the Ventilus question has proven to be. But, in the future, even more such infrastructure questions will have to be addressed and solved if we want to keep our energy affordable and reliable.

4. Energy prices: correct energy prices are more important than subsidies

In Belgium, electricity is almost four times more expensive than gas. This is so because all kinds of costs and taxes are passed on through our electricity bill, whereas very few are passed on through our gas bill. Climate investments such as heat pumps and electrification of production processes are intrinsically profitable, but don’t get off the ground because of this. To make these climate investments truly profitable, electricity should only be 2 to 2.5 times more expensive than gas, which is the case in several other EU countries. Keeping gas as cheap as possible is not a solution – not even for vulnerable households. The costs of the gas grid will be borne by fewer and fewer people, and thus increase substantially for those who cannot invest in heat pumps. If we fail to meet our climate goals, Belgium will need to purchase emission certificates, which could potentially cost billions of euros. If the ratio between gas prices and electricity prices is better balanced, subsidies for heat pumps could be eliminated. These subsidies currently benefit a target group that actually has the means to invest.

5. Renovation: renovation is more than insulation

Emissions come from a.o. gas and fuel oil boilers in our buildings. Purely technically speaking, solutions are obvious. Renovation is not just about insulating homes, but also about the importance of a healthy indoor climate and the switch to fossil-free heating. Heat pumps are about four times more efficient than burning gas. In densely populated city centers, district heating networks can be a solution, with heat produced centrally and climate-neutrally. But the technical solutions cannot be separated from the societal challenges such as financing, substantive support to unburden and a sufficient amount of construction workers. Collective renovation trajectories can here offer solutions.

6. Road transport: electric vehicles are the future

Emissions also come from a.o. gasoline and diesel in our cars. Electric road transport offers a solution here. Electric cars are almost three times more efficient than cars with a fossil fuel combustion engine, and come with a huge reduction in greenhouse gases. Electric buses are also cost-effective. Freight transport (light van and short-distance) can perfectly be electrified. Electric long-haul trucks are on the way. On top of the positive impact on the climate, there are additional benefits such as a strong reduction in local emissions and in many cases lower noise levels.

7. Hydrogen: neither for heating, nor for road transport

In recent years, we have witnessed a lot of subsidies going towards hydrogen. But for road transport, electricity is simply much more efficient and cheaper. Direct electric driving is almost three times more efficient than driving on hydrogen. For heating, heat pumps are also almost four times more efficient and, over their lifespan, cheaper than any hydrogen-based solution. In the upcoming period, it is therefore important that subsidies for hydrogen are prioritized for industries that can use hydrogen as a raw material.

8. Shipping hydrogen: no, better bet on hydrogen derivatives and intermediates

Several party programs still state the ambition to become a major supply and transit country for hydrogen. However, while importing hydrogen through pipelines may be economically interesting, it won’t be happening tomorrow. And importing hydrogen by ship will never be economically interesting, as transpires from our calculations for the EnergyVille PATHS2050 Platform. Therefore, one is better off betting on other products which are made with hydrogen, but are easier to transport – such as green ammonia, methanol or sponge iron.

9. Europe: European topics are unclear

Many voters have little sense of what topics are on the European agenda, and vote with national policy authorities in mind. But at the European level, important decisions are in the pipeline for the next legislature – especially regarding the competitiveness of the European industry in the years to come. On top of that, topics such as the Emissions Trading System (ETS), carbon border taxes and geopolitics can have a major impact on our energy bills as well as on our prosperity, but are so complex that political party programs tend to avoid addressing them.

10. Nuclear power plants

In the past legislature, it was decided to keep two of the nuclear power plants (Doel 4 and Tihange 3) open for 10 more years. Doel 3 and Tihange 2 had already been shut down. For Doel 1/2 and Tihange 1, closure has been planned.

A follow-up study for the EnergyVille PATHS2050 Platform calculated the extent to which extending the lifetime of Belgian nuclear power plants could be of interest. A 20-year extension of Doel 4 and Tihange 3 could be economically viable. However, extending additional nuclear power plants in the coming years would not be an obvious course of action. When Doel 4 and Tihange 3 were extended, the Belgian state had to step in to convince operator Engie to do so. It is therefore expected that the financial conditions to keep additional nuclear plants open will inevitably be less favorable than those achieved for Doel 4 and Tihange 3.

Building new nuclear power plants is an alternative track being explored in the Netherlands, for example. A nuclear power plant could be ready roughly between 2035 and 2040 and produce climate-friendly power for decades to come. However, this requires a risky investment with a long payback period. Investors will therefore expect some form of state guarantee, for example in the shape and form of guaranteed off-take prices for the power produced. The decision to build new nuclear power plants is not simply a yes or no question. It also involves considering the extent and financial conditions under which the state is willing to take part of the investment risk.

Disclaimer

This article and accompanying Energie Dossier 2024 follows from the scientifically substantiated input of many EnergyVille experts, who relied on the results of specific datasets and model calculations that did not or can not necessarily take into account all possible factors influencing energy, climate and industrial policy. If you would like more details, you are welcome to reach out to us at info@energyville.be

Furthermore, we at EnergyVille strive to widely disseminate our scientific knowledge and expertise. This framework of striving to inform is what constitutes the origin of this article and accompanying Energie Dossier 2024. As such, neither this article nor the accompanying Energie Dossier 2024 is in any way intended to be an opinion piece, and any possible interpretation of the text as such should not be seen as a reflection of the intent of our EnergyVille authors.