While the energy transition to decarbonise the EU’s economy fully by 2050 will be felt economically in all member states, the costs of decarbonising can be substantially lowered through maximising the production of hydrogen, which in turn can be used to generate electricity. This column uses a global climate-energy economic model to compare three energy production scenarios. It finds that wind energy plus gasification of biomass, natural gas, or coal with carbon capture storage can reduce the cost of achieving Europe’s 95% emissions-reduction goal by 40%. The energy transition to decarbonise the EU’s economy fully by 2050 will be felt economically in all member states. An illustrative example of this is that even before the start of this transition, the announcement of a green tax on fuel in France has already evoked a wave of protest from the yellow vest movement. Clearly, it is important to decarbonise the EU’s economy at the lowest possible cost. These costs can be substantially lowered through producing hydrogen by gasification of biomass and coal in combination with CO2 capture and storage.
The current transition model in Europe focuses primarily on stimulating wind energy. The fluctuating supply of wind energy entails extra costs via extra investments in network capacity and backup power when wind is absent. On the other hand, the surplus of wind turbines can be used outside the electricity peak, whenever it is windy, to produce hydrogen by ‘free’ wind without carbon emissions.
Whilst the European Commission stated that hydrogen is useful for energy transition in several transport applications (EC 2018), the climate bill can be further reduced by large-scale use of hydrogen through the gasification of biomass or coal in combination with CO2 storage. The use of hydrogen does not lead to air pollution or carbon emissions and, in addition to transport applications, it can secure supply in a flexible power plant as well as being used in all kinds of processes in industry – even in heating installations as a replacement for natural gas. The negative emissions of biomass gasification with CO2 storage can also increase the emissions budget of other sectors, thus enabling us to postpone or avoid more expensive measures such as energy-neutral buildings.
Moreover, coal gasification with CO2 storage has so much hydrogen potential that it eliminates the need to expand expensive nuclear power plants while at the same time providing clean fuel for other applications.
Figure 1 illustrates two alternative transition models to electrolysis via wind energy. In one model, biomass can be used for gasification to produce hydrogen while, in the second alternative, it is also possible to opt for coal gasification. Hydrogen is a clean fuel, and hydrogen production through gasification can also be clean as long as the CO2 produced during the gasification process is captured and stored under the North Sea.
Model simulations of the energy transition
We calculate the effects on the energy price of the various transition scenarios using a global climate-energy economic model, the Model for Evaluating Regional and Global Impacts of the Greenhouse Gas Effect (MERGE), which distinguishes between the most important regions, including Europe. MERGE calculates the energy consumption and supply of coal, oil, and gas, the associated CO2 emissions, the prices of fossil energy, and the use of options and costs to counter greenhouse gas emissions up to 2100.
The model bases its calculations on cost optimisation of an emissions path for the world corresponding to a maximum 2°C annual rise in temperature, while for the EU, the target is a 95% emissions reduction by 2050. While non-energy-related emissions remain positive, energy-related emissions are close to zero or even negative.
To analyse the effect of different transition models on the climate bill, the following scenarios with different ways to produce hydrogen are examined:
- An ‘wind only’ scenario, where hydrogen is produced only via electrolysis from wind-energy
- A ‘+BECCS’ scenario, which, in addition to scenario 1, also produces hydrogen from biomass gasification with carbon capture storage (also called bio-energy with carbon capture storage, or BECCS))
- A ‘+grey’ scenario, which, in addition to scenario 2, also produces hydrogen from gasification of natural gas or coal gasification with carbon capture storage.