Hou Mingyang China Petrochemical Petroleum Exploration and Development Research Institute
On the afternoon of July 18th, local time, the European Parliament held a plenary session in Strasbourg, and Ursula Ursula von der Leyen was re-elected as President of the European Commission for a term of five years. Since the election of the European Parliament, the transition work has been basically completed, and the relevant arrangements have set the basic direction for the future development of Europe, and also determined the future energy transformation of the EU.
Since direct elections began in 1979, the European Parliament has become a vital link in the EU structure. The 720 delegates from different countries are not grouped by nationality, but United by political inclination. After the election, the number of seats of political parties with different political inclinations naturally directly affects the bill formulation of the new parliament and the policy direction of the European Union. However, most institutions believe that the election results of the European Parliament mean that Europe’s ability to cope with various challenges in the next few years is worrying, especially in the fields of continuously promoting energy transformation and coping with climate change. In fact, at this stage, Europe is facing many challenges in promoting energy transformation.
First of all, there is a big gap between the promotion of energy transformation plans in European countries and the overall goals of the European Union. In 2022, after the conflict between Russia and Ukraine broke out, the European Union announced the RePowerEU plan in May of that year, aiming at reducing dependence on Russian fossil fuels and establishing a more flexible energy system, and put forward goals in improving energy efficiency, increasing supply diversification, rapidly replacing fossil fuels, and accelerating the transformation of clean energy. However, because the RePowerEU plan is not legally binding at the national level, EU member states still retain considerable control over their own energy and climate policies, and some national goals fall short of the overall goals of the EU. For example, in the National Energy and Climate Plan (NECP) submitted by governments to the European Commission, the draft plans of some countries failed to meet the requirements of the EU’s 2030 goal. In addition, before the European Parliament election, Britain and some countries in the European Union have delayed the realization of some existing goals. For example, postpone the timetable for banning the sale of fuel vehicles and eliminating gas boilers.
Secondly, the development speed of renewable energy in Europe is lower than expected. Wind energy, solar energy, energy storage and nuclear energy are widely recognized in Europe as effective ways to achieve energy security and net zero emission. "2023—" issued by the European Photovoltaic Industry Association at the end of 2023; The European Photovoltaic Market Outlook 2027 shows that the installed photovoltaic capacity in the EU reached 55.9 GW in 2023, a record high, with a year-on-year increase of about 40%. According to the data released by the European Wind Energy Association, in 2023, the installed capacity of new wind power in the EU reached 16.2 GW, and the proportion of wind power generation in the total power generation exceeded natural gas for the first time. In the newly added wind power installed capacity in the EU, onshore wind power accounts for 79%, and offshore wind power has reached the highest level on record. Therefore, it is estimated that by 2030, the target that renewable energy accounts for 71% of the EU’s power sector supply may be achieved. However, on the whole, it is difficult to achieve the goal of increasing the proportion of renewable energy in the final energy consumption in Europe from 32% to 42.5% by 2030. On the one hand, achieving this goal requires Europe to further expand its investment in wind and solar power generation, which is difficult to achieve in the current weak economic recovery in Europe; On the other hand, to achieve this goal requires the strong support of relevant global supply chains, and the tariff increase imposed by the European Union on China’s new energy-related hardware makes this task more difficult.
Thirdly, the development of hydrogen energy, electric vehicles and heat pumps in Europe is facing cost challenges. In terms of hydrogen energy, "RePowerEU" has set the goal of producing 10 million tons of renewable hydrogen and importing 10 million tons of hydrogen by 2030 to replace the demand for natural gas and crude oil in transportation and other departments. However, from the reports of national energy and climate plans submitted by governments, only some countries have provided the construction targets of electrolytic cells and other supporting equipment needed to produce renewable hydrogen. At the same time, according to the plan, some green hydrogen projects will be built after 2030, and they need the support of offshore wind power to a great extent. The related offshore wind power is expected to increase significantly due to supply chain restrictions. Wood Mackenzie predicts that the actual consumption of low-carbon hydrogen energy in Europe in 2030 may be difficult to reach a quarter of the target of 20 million tons in the RePowerEU plan. In terms of electric vehicles, the development of electric vehicles in Europe is also facing a large cost problem due to the instability risk in the supply chain and the lack of expected income growth of residents. This will lead to a relatively slow growth of the electric vehicle market to a certain extent, and then affect the future electrification of the region. In terms of heat pump, it is an important content of European climate goal to realize building heating electrification through heat pump. The EU aims to add another 60 million heat pumps by 2030. However, due to factors such as rising raw material costs and rising selling prices,According to the data of the European Heat Pump Association (EHPA), since 2023, the sales of heat pumps in Europe have shown a downward trend. In the first quarter of this year, the sales of heat pumps in Germany even dropped by 52%.
Finally, the demand for natural gas is difficult to be replaced in the short term. The original intention of "RePowerEU" plan is to seek diversification of natural gas supply and replace natural gas in heating and power generation. However, under the realistic demand of ensuring the security of regional energy supply, natural gas, as the only fossil energy that can give consideration to supply stability, consumption economy and clean and low carbon at the same time, has a high demand in Europe. Britain, Italy, Germany, Greece and Ireland are building new gas-fired power plants. Among them, Germany has stopped nuclear power and sought to phase out coal-fired power, and plans to provide state support for natural gas power plants to support the power grid during peak demand and unstable supply of wind and solar energy. Wood Mackenzie predicts that the demand for natural gas in Europe will drop slightly from 314 billion cubic meters in 2023 to 295 billion cubic meters in 2030, which is much higher than the planned target of "RePowerEU" to 220 billion cubic meters in 2030.
Generally speaking, although this European Parliament election is not a referendum on the EU’s RePowerEU plan and the 2030 climate target, the goal of energy transformation is undoubtedly easy to fall victim to populist politicians. As the Reuters report said: "The rising cost of living of European people is quenching the enthusiasm of society for green energy transformation." As one of the regions with the most active action of net zero emission, after this parliamentary election, the trade-off and political game of various forces in Europe may trigger the shift of its energy transformation policy, which will have a greater impact on the prospects of world energy transformation.