Wrapped: Von der Leyen’s first mandate - Chronicle of an energy revolution [Enlighten me #2]
How has energy changed in the last 5 years? Find out in this month's analysis, powered by exclusive insights from Zero Carbon Analytics.
Ursula von der Leyen is about to be officially re-elected as the leading candidate of the conservative EPP, the party that’s poised to win the EU elections in June - making a second mandate as Commission president very likely.
But in terms of energy, how has the first term been?
When little-known Ursula von der Leyen was elected Commission president, few could have predicted what would happen in these five years: a pandemic, a war on the continent's doorstep, the beginning of a new cleantech-led industrial era…
The continent von der Leyen inherited in 2019 has little to do with today. The energy landscape is even less so.
In this edition, I’ll take you on a journey back in time - powered by exclusive insights from Zero Carbon Analytics. We’ll go back to July 2019, and compare it with today’s situation. Teaser: it’s a renewables revolution.
Back in 2019, renewables accounted for less than 20% of Europe's energy and about half of our gas came from Russia. Five years later, renewables are on track to double their importance by the end of the decade, and Russian energy has fallen dramatically, with some pipes such as Nord Stream shutting down completely.
How have we changed? Here’s a quick snapshot.
Renewables expansion: a revolution. More electricity from wind than from gas
Renewable jobs: on the rise. A sweet time to choose careers in these fields
Investments in renewables: multiplying.
Fossil fuel imports: gradually but steadily declining
Energy demand: falling
Electricity prices: higher than five years ago because of volatile fossil fuel imports, but returning to some stability
Scroll down for the deep dive - informative graphs ahead!
Renewables are now powering half of the continent’s lights - in a decade, all of them
We start the journey at night, with a satellite view of the continent at night. See all those bright spots… how many of them are lit by renewables?
In 2019, when von der Leyen became President of the Commission, only 34% of European electricity came from renewables. Over the past five years, the contribution has grown steadily to 44.4%. Wind alone now generates more electricity than gas, let alone coal. This was not the case five years ago.
This means that almost half of those lights we see at night are powered by renewables. In the last five years, the intensity of carbon emissions of the EU’s power sector has been reduced by more than a fifth (22% less).
Since 2019, we have installed solar panels at an unprecedented rate. So much so that the EU has more than doubled its capacity: from 118 GW in 2019 to 263 GW today. Wind has also grown substantially: from 168 GW in 2019, today there are more than 220 GW installed.
Renewables have continued to outperform expectations. Every time the International Energy Agency has revised its forecasts, it has been upwards. In its report on renewables, the IEA makes a forecast for the next five years. In 2021, they estimated that by 2026 half of our electricity would come from renewables, a figure we are already close to reaching today. In its latest estimate, the IEA already puts the EU's share of renewable electricity at 60% by 2028.
By the mid-2030s, the European Commission expects absolutely all those lights we see from space to be powered by renewable sources.
Looking at the share of renewables in total energy use, not just electricity, the forecasts have also been falling short. When von der Leyen took office, the EU target was 30% by 2030. Now that target has risen to 42.5% of total energy. Where are we today? The contribution of renewables has been gradually increasing. The most recent data is from 2022, when the renewables share was just over 23%.
Jobs are up - a sweet time to choose careers in the renewables area
The boom in solar and wind power is being felt in the job market. As of today, the solar industry employs some 650,000 people, according to data from 2022. By 2025, they expect that figure to reach one million employees in the EU. The wind sector, on the other hand, has remained more or less stable in terms of employment, with a level of around 200,000 direct employees in the EU, according to the European Wind Energy Competitiveness Report. The industry expects to reach between 300,000 and 500,000 jobs by 2030.
Solar and wind are just two examples, but the jobs of the transition are many more. A factsheet by the Electrification Alliance shows that hundreds of thousands of jobs will be created in electrical contractors, electric vehicle professionals, grid expansionists, heat pump technicians...
Investment in net zero is going up
The world's energy transformation is not going unnoticed by investors. In the last five years, the amount of capital invested in clean industries has more than tripled.
EU’s clean energy sectors attracted $279 billion of investment in 2023, according to estimates by Zero Carbon Analytics. In 2019, that figure was $77 billion. That’s more than a 3x increase.
While the leap is spectacular, it is expected to continue to increase sharply in the coming years. Under pressure from China and the US, which are investing massively in their cleantech sectors, Europe sees the need to catch up to stay competitive in the net-zero industry era.
In fact, according to think tank I4CE, investments in clean technologies must double in order to reach the EU's climate targets by 2030, i.e. around the time the next Commission's term ends. In a recent study, I4CE looks beyond energy investments to 22 sectors. Some of the sectors where the investment gap is largest are the purchase of electric cars, the installation of wind energy, and grids.
Another recent study by Institut Rousseau put the annual investments needed to reach climate neutrality by 2050 at €1.5 trillion. The European Commission itself expects dramatic increases in investment in clean technologies in Europe.
Fossil fuel imports going down
Russia's invasion of Ukraine has undoubtedly had a brutal effect on the EU’s energy landscape. In von der Leyen's five years in office, we have not only drastically reduced our energy dependence on Russia - the EU has also generally reduced oil and gas imports and overall demand.
ZCA estimates that fossil fuel imports have been reduced by about 6% between 2022 and 2019. However, rising fossil fuel prices are causing bills to be substantially higher than in 2019.
But how has Europe replaced the gas it imported with the Nordstream and Yamal pipelines? A Bruegel report last year shows that roughly two-thirds have simply been reduced by lower gas demand. The rest has been replaced by imports of liquefied natural gas from other countries, mostly the US and Norway.
Energy demand going down
Electricity consumption has also decreased significantly since 2019. Specifically, by 6.26%, according to data collected by Zero Carbon Analytics. Apart from the anomaly of the pandemic, we can see in the graph how this consumption has been falling little by little each year.
Gas demand is also falling. According to figures provided by IEEFA, EU gas consumption has fallen by just over 19% since 2019 (408 bcm in 2019 to 330 bcm in 2023).
This went beyond the 15%-reduction EU countries had agreed upon. Last week, the Commission recommended renewing this goal for one more year.
Reasons behind this success include demand cuts, a higher presence of solar and wind in power generation, and a warmer winter last year.
As of today, gas demand is the lowest in 10 years. LNG imports have increased somewhat since the start of the war in Ukraine, but analysts expect LNG demand to fall steadily in the coming years as well. This is not stopping many governments from planning new LNG regasification plants - looking at you, Germany! This seems set to become a public money sink as more than half of this infrastructure could be idle after 2030, analysts warn.
Power prices increase the least in Southern Europe, where renewables thrive
Finally, prices: the biggest headache for Europeans in the last couple of years. After the 2022 peak, which led many governments to subsidise part of their citizens' bills, prices are easing again.
However, they have not yet returned to pre-war levels. In countries such as the Czech Republic, Germany and Austria, electricity prices are still almost double what they were when von der Leyen took office. Spain and Portugal are the countries that have been least affected by the change, with increases of just over a third.
Predicting the future isn't my thing, and I certainly don't have a crystal ball. However, all signs point to the possibility that, by the end of von der Leyen's potential second term, those lights we see from space will mostly be powered by clean energy sources.
That would make us less dependent on oligarchs and reduce our contribution to climate change.
The path seems to be set, as evidence-based advice by scientists is strong, but a lot will depend on political events, starting with those still to happen this year. Ehem, EU elections. Ehem, US elections.
Dive deeper: how is Europe’s energy landscape changing?
Atlantic Council: Ursula von der Leyen has delivered major wins on decarbonization. What would she do with another term?
Euractiv: The Brief – From Barroso to von der Leyen: Where next for the Green Deal?
Micheal Liebreich: Net Zero Will Be Harder Than You Think – And Easier. Part I: Harder
MichaelLiebreich: Net Zero Will Be Harder Than You Think – And Easier. Part II: Easier
Financial Times: Europe’s solar crisis will cast a long shadow
Financial Times: How Germany’s steelmakers plan to go green
Bloomberg: Spanish Power Is Almost Free with Renewables Set for Record
What will the European Parliament look like after June? Latest polls
Polls should always be taken with a pinch of salt. But when it comes to European elections, even more so. Aggregating the results of elections in 27 different countries, with their own local realities, is very complicated. Even more so when we try to predict which group in the European Parliament each national party will join.
That said, we can see in the polls a shift to the right and the far right. Last month, I showed you the results of a much-talked-about ECFR poll.
This month, I’ll show you the 'nowcast' from Europe Elects, Euractiv's poll analysis service of choice
As you can see, the order of arrival is the same: first the two big ones (EPP, S&D), in third place is the far right of ID, and in fourth place Renew, closely followed by the hard right of ECR. The Greens, in sixth place, would receive an important setback.
But what about possible coalitions to support the next Commission President? In a parliament with 720 seats, the majority is set at 361.
A grand coalition of EPP, S&D and Renew would leave 402 seats. This would be a relatively comfortable outcome for the continuation of business as usual, although the Conservatives' gap with the partners would widen, providing for a more conservative Commission. This seems the most likely scenario today - if a joint vote of the Populars and Socialists is still possible in the increasingly polarised context we are living in.
If the EPP were to opt for a pact with ECR and ID, moving completely to the more radical right, they would reach 351 seats, short of a majority.
A more moderate right-wing coalition (EPP, ECR and Renew) would yield a total of 342 members, even further from a majority.
Calendar: Coming up
4 March: Energy Council. Agenda.
6-7 March: EPP congress in Romania. Ursula von der Leyen is expected to be officially endorsed as the party’s main candidate for the next EU elections (can we still call them Spitzenkandidat?)
10 March: General elections in Portugal. It is a snap election called after PM António Costa resigned amid an inquiry into alleged irregularities in handling green investments, despite winning a third term in January 2022. Costa has denied any wrongdoing. The far-right is rising in the polls. A winning coalition is unclear at the moment. The Guardian explains the keys.
11-14 March: European Parliament plenary in Strasbourg, including a vote on the Industrial Emissions Directive, and the Energy Performance of Buildings’ Directive (EPBD). Provisional agenda here.
11 March: Eurogroup
12 March: Commission to release communication on managing climate risks
17 March: Presidential elections in Russia, with Putin expected to win.
18 March: Foreign Affairs Council. Ministers are expected to endorse conclusions regarding climate and energy diplomacy. This presents a distinctive chance to synchronise the perspectives of all 27 EU member states on the 'United Arab Emirates (UAE) consensus' from COP28, defining its implications for EU diplomacy.
21-22 March: European Council. On the provisional agenda, Ukraine, defence and the Middle East.
23 March: Slovak presidential elections, first round. Main candidates are Peter Pellegrini (supported by the current government, under the radar for trying to reduce corruption penalties), and Ivan Korčok (supported by the liberal party Progressive Slovakia, runner-up in the recent general elections). A second round two weeks later is the most likely scenario. Keys here.
25 March: Environment Council. This is not the one for the Nature Restoration Law ;) - that’s expected for a vote at an Ecofin on 12 April
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