Reaching net zero: scenarios and regulation to rethink sector couplingJun 09, 2021
Good morning and welcome to another exceptional event Despite the promising prospect of meeting climate goals by 2030, net
zeroby 2050 remains a technologically challenging policy goal; In fact, it will require an unprecedented effort to decarbonize three times over the next 30 years. faster than the rate of emissions reduction has been in the last three decades, it will also force us to
rethinkour European and national regulatory frameworks and tools in that context, the
couplingof electricity and gas in a decarbonized economy. The new cell report establishes political paths. The EU must move forward to avoid blocking the path to net
Others say this report should certainly be seen as a landmark contribution to European energy policy based on state-of-the-art modeling of a variety of energy system
scenarios. To achieve deep carbonation by 2050, the report concludes with 41 regulatory and policy recommendations that consider the challenge of building flexibility and resilience in a whole-systems approach that includes immediate next steps and near-term policies. The research project on which this report is based has been a comprehensive and challenging endeavour, for which I would like to very warmly thank the authors, Professor Michael Pollitt, Sarah's Co-Director of Academics and Professor at the University of Cambridge, and Dr . chi kung chong, cellular researcher and director of the cambridge energy policy forum.
More Interesting Facts About,
reaching net zero scenarios and regulation to rethink sector coupling...
Analyzing the riddle of
couplinghas turned out to be no easy task, but as I hope you can see for yourself in the next 150 minutes, the authors have done an impressive job and have also benefited from fantastic input from a highly diversified team. of cell member organizations, including corporations and regulatory authorities active in the gas and electricity
sectors, who have sponsored the project, let me remind you however that, in accordance with the statutes of SER, the sponsors do not assume any responsibility for the content of this independent report. Furthermore, the opinions expressed therein are solely attributable to the authors and do not necessarily correspond to the opinions of Ser or any sponsor or any other Sale member.
I would also like at the beginning of this session to publicly pay tribute to the dedication of maximo michinili who has brought this project to its successful completion with the support of his colleagues in the secretariat of our expert group and in particular john maxweeny sofia griesen and alessandra botta we have titled this morning's events
scenariosand Regulation to
rethinksectoral coupling We have divided the debate into two sessions, each of which will consist of the presentation of a part of the report and will be followed by a round table with senior representatives of the EU institutions and key industry players and regulators of the gas sector. and the electricity sectors the first section the first session will focus on the scope and objectives of the study, on the main results of the four net zero scenarios modeled by the authors and on the challenges and implications of these results for the energy system of the future and in the future.
In the second stage, we will shift the conversation to political and regulatory issues and focus on the main recommendations of the reports, so before we begin let me quickly remind you of some house rules. This event is streamed live on the website www.ser.eu and on sara's youtube channel it will also remain on those sites for later viewing and therefore Chatham House rules do not apply. Secondly, we also invite you to join the discussion on Twitter using the hashtag bar. Sorry, hashtag sector coupling and finally due to time constraints. The authors will have to summarize the presentation of their very complete and detailed report in two 15-minute periods.
Therefore, this will only allow you to highlight the main features of his extensive work, however, for the benefit of those of you who want to have it. Subsequently, in addition to the full report, which is securely available, a more comprehensive audiovisual presentation by the authors will soon be recorded and put online on our site, so I will now give the floor to come. For the first 15 minute presentation of the studies, target scope and scenario results, thank you very much Bruno for this introduction, let me put the slides on the screen. I hope all panelists can see the slides on their screens.
Go ahead, Kahn. Yes, so good morning everyone, I am honored to join this event along with our distinguished speakers and panelists on behalf of our entire research team. I would like to thank our sponsors and serve for supporting our research project. It's not an exaggeration to say okay, you can continue, your slides are on the live stream, so go ahead, please continue with your presentation, we can see it on the live stream, Michael, can you take over? one of our one of the two authors, please start the presentation you want, can you hear me? Sorry, yes, go ahead, your presentation can be seen anyway, even if you don't see it on your screen, go ahead, please, oh, okay, yes, start. the presentation um yes, on behalf of our entire research team, I would like to thank our sponsors and servers for supporting this research project.
It would not be an exaggeration to say that the product of this research is a true team effort, not only the academic teamwork behind it, but also many hours of discussion via zoom teams and ms with our sponsors about our research challenges in a circumstance where we all needed to adapt to the then new covenant in reality, which made our research and our commitment less. colorful than we expected. I am also lucky and honored to have had the opportunity to work with my colleagues at Cambridge over the last 18 months of this project and I hope that in the next 15 minutes of this elevator pitch I can do justice to representing many of the days and months of your efforts and research.
I would like to thank professor michael dr david reiner uh dr carmen lee rebecca lee and drock agarwal without your help none of this would be possible today so without further ado for the rest of the time I set out, I will briefly cover five areas of our research project , so I will briefly review the scope and objectives of this research. I'll very quickly mention our energy system model that we used for this project and obviously focus. about the key messages emerging from the four scenarios we modeled, I will then recap the main findings, which will hopefully provide insights to stimulate discussions among our panelists further in the consumption of this research project.
We have been very lucky to have time to discuss with our academic team, but also with SAR, about our research questions that would not only have a political and business impact on the formulation of energy and climate policies, but would also allow us, as academics , being at is at the forefront of academic research on economics and energy and climate modeling, so we set out to answer two research questions. The first is what are the sources of flexibility and coupling of the gas and electricity sector and its role in a deeply decolonized energy system. The second question. is what are the complementary dimensions and tendencies of different energy sources and vectors in practice.
We have two objectives for this research. The first is to reshape and calibrate our two of four scenarios to the relevant long-term scenarios that the European Commission has analyzed in its long-term strategy for 2050 and, based on extensive modeling, results not only in the four reference scenarios that we are going to present today, but also in the 54 sensitivity simulations to propose a set of policy and regulatory recommendations to build the first blocks of efficient gas and electricity factor coupling to achieve net zero at the lowest cost now, although for many models of energy systems and energy economies, defining coupling could be quite simple, we define sectoral coupling or energy system integration as the integration of energy consuming sectors, such as buildings, transport and industry and optimizing them with the supply sector , but in the context of this research we focus on the coupling between the gas and electricity system explicitly taking into account their joint interactions with the energy consuming sectors and the key technologies and use, therefore, given this definition as a point starting point At this point, we focus on the key set of technologies, on the coupling side of the sector, so we consider it power to gas and power to liquids at the midstream and upstream level, but we also consider hybrid successful farms , closer to the end.
We use the level of demand as sector-enabled technologies and peer-enabled technologies. We also consider sources of flexibility that could allow us to reach net zero and those we conceptualize come from gas and electricity networks. um systems or sector integration technologies. coupling technologies that would allow us to have a more flexible energy system and obviously storage technologies in the gas and electricity supply system that could contribute to flexibility in the net zero region, now, this is really our elevator pitch from a complex pan-European energy system model, which is a challenge perhaps comparable to some of the challenges we described in regional net zero, so in summary, and without exaggeration, our energy system model is one of the most advanced models capable of representing an energy system with a high level of detail ranging from modeling individual countries to including hourly time steps without which it would not be possible to quantify the system flexibility requirement to achieve that zero scenario and at the beginning of our project we absolutely considered necessary to include key individual countries. in Europe and our return dynamics in our model that would complement the European commissions' models, such as primes for example, which use a course time and a geographical dimension and therefore potentially neglect some economic and political trade-offs very important, drawing on the headline figures and results from The Four Scenarios, this shows you the results of our final net zero baseline energy consumption.
The model considers that final energy consumption will reach around 8,200 terawatt hours. We see a central role for direct electrification in such a network. System zero electricity meets around 51 percent of final energy consumption and this is a strong result that is in line with the European Commission's Net Zero Scenarios Technology 1.5 and is in line with many academic modeling works analyzing deep decarbonization pathways now that they say that We also clearly see that other low-carbon energy sources, such as bioenergy, hydrogen, carbon-neutral synthetic fuels, are gaining importance in the supply of final consumption. Their combined share of final demand reaches 36 percent in our net-zero baseline scenario now, when we analyze our first set of modeling results.
Internally, Professor Michael Pollard reminded us that we can all get very emotional looking at the 2015 figures, but how to put this into reality and contextualise it well. I think we just need to look at the current state of things and the table, here, shows the final 2018. consumption in Europe, you know, we, and we know where we're going, but we also shouldn't forget where we are now and in 2018, as you can See, our energy system is heavily dependent on fossil fuels, most of which are imported and electricity accounts for only 33 percent of 2018 final consumption, therefore direct electrification of our economies must double by 2050, while 60 percent of our current final consumption must be replaced in some way by carbon-neutral energy sources, as you can see, natural gas in 2018 made up eight. 23 percent of final consumption predominantly to heat our homes, oil and petroleum products, was considered 37 in 2018, final consumption predominantly in the road transport sector, so
reachingthat zero requires the decarbonization of those two sectors very important economic benefits, but it also requires electricity generation sectors to be largely carbon-free and, in fact, if you look at this graph of what your generation shows in our net zero baseline scenario, it may indicate that, to achieve that zero, the electricity generation sector must be carbon-free and is the electricity systemtruly carbon-free, as you can see, for example, the share of renewable energy reaches 81 of the total generation.
In our net zero scenario, nucleator 12 and biomass with ccs, six percent, you can also notice that one percent is ccdt generation um, but when you run ccg, it works. based on syngas and methane, which are carbon neutral, so in effect it is a truly carbon-free electricity system that requires reaching net zero emissions now again. If we compare this to the 2018 cohort mix, we can only appreciate the scale of the challenges and changes. that industry and governments in Europe must do in a fairly short period of time and here the challenges and scale of work ahead in the electricity system itself if we really want to achieve net zero can be seen by looking at historical electricity generation . expansion over the last 30 years in Europe and the generation expansion required over the next 30 years to reach our net zero model, we can see that, relative to the 2018 level, electricity supply needs an 88% increase in 2050.
This is five times the historical supply growth rate. If we look at the full 30 years from 1990 to 2018 as a whole or twice the rate of expansion we saw before the 2008 financial crisis. And it's not just an expansion of generation, our net zero scenario requires the expansion of certain technologies as You can imagine that our net zero scenario requires more than 4000 tera2 hours of wind generation by 2015. Now, to put this in the historical context of the expansion of wind generation, we must double our hysterical efforts to get wind into the system energy to reach the required level. level of wind generation in our necessary scenario, however, based on our national modeling results and the historical trend in the incorporation of solar energy into the system could be more or less on track to achieve the solar generation target, so While electricity plays a central role in achieving our goal of net zero emissions by 2050, the role of bioenergy and its derivatives cannot be ignored.
Also overestimated, to reach our net zero scenario we will need more than three thousand six hundred thousand dollars in energy supply and this does not seem to be a major limitation, if we look at the growth of bioenergy supply from 1990 to 2019, but what seems to be a challenge is to first increase biomethane production to the required level, so that at our net zero in 2050, the required method is 1150 hours compared to production in 2018 which reached only 23 tera hours, this is an increase of one factor of 50 since Taking into account the current production level of 2018, the second challenge is obviously to expand the deployment of carbon capture technology in a context where we see rather limited progress in this area.
Now, moving on to the results by sector, our model also analyzes the evolution of the demand for energy services in buildings and in road transport in the construction sector we see a large adoption of heat pumps and hybrid heat pumps, with electricity as a fuel that absorbs 65 percent of the demand for thermal energy services. The main benefits of the hybrid heat pump is the flexibility of the hybrid heat pump on gas. The ship operates mainly at peak times, which makes it possible to optimize the overall energy system with the supply of electricity for water and space heating purposes at a stable level and when the hybrid gas pump operates, it largely consumes a mixture of gases carbon neutral, so synthetic gas, as well as biomethane and a little fossil gas, so when turning to road transport or decarbonizing the sector, it is very likely to be electrified, as you can see, as more than 80 percent of the passenger car fleet and public road transport are electrified and heavy duty vehicles are dominated by hydrogen gas trucks. fuel trucks and also eight percent by electric heavy vehicles, so in addition to the net zero scenario I mentioned, we also model three other reference variants that differ in two important dimensions: the level of gas emissions reduction ambition greenhouse effect and the role of electricity. and gas in decarbonization and we model these baseline scenarios to understand the impacts of moving from the 90 GHG reduction target to net zero emissions and secondly to understand the key drivers of electrification and gasification as a potential solution to get to net zero emissions, so just like that zero baseline that I just talked about, the two extremes reached net zero, but with different paths, net zero electricity or nze is highly dependent on electricity, as name suggests, while the other scenario, net zero gas in sl or ntg largely depends on the gases to deliver. decarbonization, but here in this graph for simplicity, the final consumption structure is shown only for the three net zero scenarios and in the report we detail the impacts of going from 90 to net zero, as well as you can see here.
Changing the main input assumptions about raw material prices, the cost of wind and solar energy and the purchasing of energy and its availability produces a wide range of results, for example the role of electricity which you can see here in final consumption ranges between 36 percent on net zero gas and 68 percent on zero electricity based, so just to summarize five key conclusions are drawn when comparing the four reference scenarios, but obviously this is far from exhaustive and The report details many other ideas, as we have said before we see a central role for electricity in all four scenarios the ratio of electricity and final consumption could reach 68 in the net zero electricity scenario.
We also see a central role for ccus as we move from the 90 percent GHG reduction target to net zero because eliminating 10 percent residual emissions requires a four-fold increase in permanent C2 sequestration. based on the modeling results, thirdly, methane supports deep decarbonization in both the 90 scenario and the net zero scenario, while hydrogen plays a leading role when we need to achieve residual greenhouse gas emission of tone Net zero primarily in hardware-based sectors such as transportation and power generation sect of the industry is largely decarbonized even in a ninety percent GGG reduction scenario. So far we have given you some headline figures and put them in historical context to inform what political support might be needed to achieve.
Let's do this last slide that describes what we think. is one of our main contributions to the academic work on netzero modeling, it is for this reason that our academic team has worked so hard to establish a multi-regional audio power system optimization model with the ability to make optimal operational and investment decisions only. and that has a complete coupling of the supply with any use that demands technologies, is the understanding of the flexibility requirements and the sources of that flexibility when reaching net zero, which is considered very important in academic work, so Our energy system must be very well connected to offer special services. flexibility is needed we need investment in national transmission and distribution networks we need cross-border interconnections to support the rapid deployment of renewables from local to remote locations our net zero energy system should be built all forms of temporal flexibility to achieve net zero emissions first We need to invest in interseasonal flexibility or support assets to offer seasonal flexibility, for example we could see traditional seasonal gas storage, although on a much smaller scale than today, we could see the emergence of new forms of seasonal storage, for example, the production and storage of green hydrogen. support the minimization of renewable energy curtains and, in particular, solar generation in summer times, when demand is very low, therefore, transform free electricity into hydrogen for future periods in hydrogen consumption in other sectors.
Excuse me, can I ask you to wrap up now because we really need to wrap up thanks, yeah, just one more minute of intraday flexibility. We also need hydra-based electric power storage and generation. We may see greater adoption of vehicle-to-grid connectivity from electric vehicles and battery storage. We may also need intraday flexibility in hydrogen. Supply and eventually hybrid heat pumps and written daytime methane pipeline flexibility will also play a key role in intraday flexibility, so to summarize key model results we see a key role for electricity , but we also see a role for synthetic hydrogen and biomethane fields.
Modeling scenarios confirm the need to increase traditional and new forms of flexibility. They support deep decapitation. Global net zero remains an extremely technologically challenging policy goal involving multiple new technologies at scale over a 30-year period and therefore the failure to scale up any of the key technologies we have described. , such as renewables, electricity, biomethane, hydrogen or CC, will probably block the move to net zero emissions, requiring a currently unforeseen technological advance in the next 30 years, thank you, thank you, thank you very much. A very big piece of work and, without further ado, I would now like to ask Maximo Michi Nilly to moderate the first panel discussion on the implications of those scenarios.
Max. I'm sorry again. Thank you very much Bruno and Kong. uh for the presentation and the kind words um, I think we have a very interesting debate ahead of us. I would like to remind everyone that you can ask your questions using the solido hashtag sector link and without further delay I would like to start introducing our very distinguished panelists let me start with antonio lopez nicolas deputy director of energy and renewable systems integration at the dg energy european commission welcome antonio ethe davkamen is director of the transformation project at fluxes the belgian gas dso pascal fong director of external relations on behalf of the elia group the belgian electric Then we also have Simoni Mori, executive vice president and head of Europe in the Netherlands and, for last but not least, annie greg greville, director of international relations at Venice, the German regulator, so welcome everyone again and I would like to start our conversations and exchanges with with the European commission so Antonio, how would you react to these different scenarios and main findings presented by our researchers?
Do you see some of these scenarios closer to the commission's own forecasts? and probably the last question is: do you think we are headed for a massive crisis? regulatory progress to reach this net zero or do we need some important adjustments in terms of
regulation, so antonio, the word is yours, thank you massimo, thank you very much for serving for the invitation to today's event. I think the report is very interesting and I think it's hitting the right place and the right places and trying to have a total integration of the energy system, system, perspective, so this is very good, it also focuses on how to achieve net zero , how to achieve climate neutrality.
It means that both things together is what keeps us busy these days at the European Commission, as you know, based on the findings of the climate targets plan, we are now preparing the feed for package 55, we are deep in the phase impact evaluation. for the different legislative proposals that include the energy efficiency of renewables and the different climate legislations, so this is happening now and I think this report looks at the same issues that we are looking at in our model and that we look at in the climate targets plan , so this is very welcome. It's also taking, as I said, a whole system perspective.
Looking not just at the electricity or gas sector, you're looking at the downstream sectors and how to decarbonise the new ones. sectors and see the role that different energy vectors can play. I think that's also a very important thing that gets you guys in the right direction, so let's move on to the report itself and I'm trying to answer some questions for you. I mean, from what I've seen in the DDT report, I mean he made the scenario that it could be closer to the London Commission strategy and the climate targets plan is your core scenario.
I would say that I meanthat we've seen, I would take this with a grain of salt because we haven't looked at the details in depth, so I mean you saw that the best path to climate neutrality is balanced use. of several energy carriers with a more diversified energy mix and with stronger links between MLD carriers, we echo a very new conclusion that electricity will play an increasingly important role in our model, as you know, I want That is, the electricity sector will pass. from being a quarter of final energy consumption now to half of final energy consumption in 2050, so this is very much in your assessment, I also want to say that you have explained that the role of methane is based on biomethane and synthetic methane will continue to be important to achieve net zero and that the role of hydrogen will also be important, especially to reach full net zero at the carbon station in 2050 and this is also very much part of our own assessment commission where We see the gas sector playing a very important role, I mean, and renewable gasoline and low-carbon gases playing a very important role, especially in how to get to the carbonized sectors.
I mean, we see that the gas sector is renewable. Local gases would be in our more in our own modeling, at least two-thirds of the final energy consumption of gaseous fuels by 2050, mainly hydrogen, but also biomethane and synthetic methane, so all of these. very in line also the conclusions on political priorities also reflect the work we have done with the integration of the energy system with the energy system integration strategy. I think the need to electrify and deeply utilize sectors based on a broader set of renewables. It is a no-regret option, so this is also very much in line with what we said in the strategies: the importance of joint planning in electricity and gas.
This is also an important finding that we strongly agree on, but also the importance of a more unified alliance. uh level playing field in terms of price and as you call it I think across all energy vectors for us this is also a very important element of our vision of an integrated energy system so I think all of this is well, that's going to be your second question before we conclude if we're heading towards a massive regulatory breakthrough, well, I think we need to have the legislation in place to achieve a 55 emissions reduction by 2030. So, this is a must and I think that one too It is an objective that has been supported by heads of state and government in December, so we need to have the right legislation.
Would this be a revolution or an evolution? I think what we are trying to do is take advantage of what we have on the energy side, that is, take advantage of the clean energy package that is currently being implemented in the Member States and I think it helps us go quite far in terms of carbonizing our energy system. What we are trying to do is look at the elements that need to be improved and that need to be complemented together with our colleagues from other services, trying to have a holistic approach to achieve net zero emissions, but also to achieve a decarbonized and integrated energy system as described in the energy system integration strategy, so this is what we are trying to do and hopefully we will be able to have the appropriate legislation in place along with The FIFA 55 package will come together this year, but also with the other elements that will come to end of the year, hydrogen and gas, the carbonisation package, which will also help contribute to that vision and also the directive on energy efficiency of buildings which will be reviewed. by the end of the year and that will also complement the division step so thank you very much I will leave it uh I will leave it here for a moment thank you thank youMany things, Antonio, I think it is a great start.
You're laying the groundwork and I think I understand what you're saying. Well, we are moving towards a very important evolution, let's say, of the
regulationthat we have and we have achieved some important results so far. but of course 2030 is going to be a challenge for the new goals so we're going to have to continue down that path and I think with that now I'd like to move on to our second panelist uh if we go and your company is very active in infrastructure. and investments in carbonized gas and rethinking the network of the future link if you want hydrogen, how do you react to these different scenarios?
Are you aligned with those scenarios and the vision that your company has, for example, in Belgium? Yes, good morning everyone, thank you. for max for this question and yes, in fact, the way we see the energy transition is perfectly in line with the different scenarios. I think everyone agrees that the scenarios offer a potential path and, depending on technological evolution, cost evolution, etc., one or the other. This scenario will happen, but basically we should see it as a kind of potential, no-regrets way to develop the path to carbon neutrality. As a company, I think what is important for us is to highlight the fact that, first of all, if we really want to achieve carbon neutrality, we will have to go to great lengths to achieve energy efficiency and we cannot underestimate the importance of that.
Additionally, the report shows that we need to reduce our energy needs by 40 or 45 percent, which is of course, I think it will be a challenge that we will all face, but it will be a minor step necessary for this transition to happen and then, with Regarding the scenarios, what is clear is that the complementarity between electrons and molecules is a fact and, therefore, The total electricity approach is having its limits and we will need massive quantities of molecules to compensate, in fact, for some of the potential problems that we could be seeing with the production of intermittent electricity, whose molecules will again depend on the technological and cost evolution of biomethane.
It sure has great potential, it has the advantage that, to some extent, it is a very sustainable way of generating energy, it also has a negative CO2 emissions footprint if you take into account the use of rinsing in the raw material and the manure and, so to speak, I think that the study also highlights a way to develop as much as possible and then with regard to hydrogen, of course, hydrogen will also be essential and there are two main types. of hydrogen, we haven't mentioned it much, green hydrogen based on renewable electricity, which of course will require a large amount of electricity, green electricity as well, and I also think we need to keep in mind that it is very likely that they will be.
Maybe at some point maybe there is not enough green electricity to produce the green molecules we need and that is also the idea of importing. It is possible that over time we will be importing green molecules from areas where there is abundant availability. sun, where then either through pipelines or overseas, you can transport hydrogen in the form of synthetic hydrogen or methane or any other form like methanol, so I think it's also very important to note that we will need massive amounts of molecules and then and then it has also been highlighted in reports carbon capture is essential carbon capture will be a key element of power for x if we really want to move towards a decarbonized world, we will need co2 and co2 must come. of the industry, for example, where it is also something that the fco2 of the industry must be highlighted as a fatal byproduct, so when changing the fuel the co2 emissions of these industrial actors will not be classified or resolved, therefore that it is also necessary to find a way to capture that CO2 by immediately reusing it as much as possible and then my last point is a very important point and was also highlighted very well in a study: the flexibility that we need to start living with the fact that our system is going to be much more complex in the future than it is today, therefore we need to consider all kinds of solutions to address very short-term flexibility needs and then of course we have batteries and demand side management etc., but also the fact that for a couple of days there may not be enough sun or wind available, what do we do during these periods?
Just look at what happened in Texas, it's something we don't want to happen because the whole system failed to some extent. It was not linked to renewables, it was linked to the general system, so we also have to take into account how to deal with that and, again, sector coupling is going to be key in that context, when there are lower acoustic prices, Ser capable of producing relatively cheap molecules that you can store, but also feeding the guests can contribute to the flexibility of the system by turning it on or off depending on the needs of the system as such, so I would leave it here, but I'm happy to discuss it.
To the UK panel, thank you very much. I think you are pointing out many elements of energy efficiency, the size of imports, the importance of some technologies and, of course, flexibility, which is the core of this report. So I really invite all the people who are watching. youtube to review the reports and the different chapters because there is a lot of material available. I think this shows how complex the coupling between sectors is and how many things can change not only for the energy system but also for the entire economy now. um let me turn to the next panelist and who now represents the electricity group, pascal funk, um, I think you know, we talk a lot about the importance of electrification and electrification, of course, we have to accelerate to achieve at least one of the if.
Do you want the reference scenario that the professor presented? If you want to achieve climate goals now, how do you react to these scenarios and what is your company doing to support this process in the near future? Thanks maximowen, thanks for the invitation. To participate in this panel, how do we react to this study? Firstly, we think it is a very relevant topic and this study is really timely, so it is very useful for us. You know that, as a group, other groups are committed to carbon. neutrality by 2050 we are ready to make our processes more sustainable and completely climate neutral by 2040 and you know, as an example, that our subsidiary company 50 Hertz, active in Germany, has established a vision and the objective of meet the demand for electricity with renewable energy in 2032.
So it is really a goal that is very close to our hearts and that is why we are happy to contribute to this study. We now believe that when we think about carbon neutrality we should really look for a cost-effective way to achieve it and so A very important element is, of course, energy efficiency and we would also like to underline that, but incomplete. In addition to that, we also see in the different scenarios direct electrification as an important point and the use of renewable energy sources. Think that these are the cost-effective measures that you know to decarburize and decarbonize, plus, of course, the use of green molecules can be used for in the section of the sectors that are difficult to use. abate um regarding the scenarios first, we believe that investigating various scenarios is a good and solid approach to have a broad view of the different pathways and assumptions of what we can see, of course, is the central role of electricity that has already As mentioned, of course it is important to us because in that sense we believe that there are several technologies close to maturity to make this happen in a fairly short period of time.
Electric vehicles also in the heating sector we believe that things can be accelerated to obtain results in relation to this, perhaps thinking about digitalization is also important because it will help to better optimize the use of these technologies for the benefit of consumers and also. of the industry and then the final point is about the power grids that will need to be strengthened for this to happen, this needs to be done on land and offshore, and for these to be the important points that we take away from the study on the policy recommendations I think that we must start from what exists today, but obviously many additions or, say, improvements will need to be made to policies and regulations to support the objectives that are being implemented, for example to give a priority to address electrification and the use of renewable energy to improve that it would be important to reflect on energy taxes to ensure that this priority is given when we talk about accelerating the development of renewable energy sources.
A lot of attention is being paid to wind projects and especially offshore projects. Thinking about regulation around hybrid projects would also be useful to support the development of these new designs for marine project delivery. Construction improvements. An acceleration of thepermitting processes. It would also be important in regulation and also in cross-border cooperation when we talk about cross-border connections between countries and then about digitalization, which should also be addressed in regulation to support all processes. These are my reflections at this stage based on the study, thank you, thank you pascal, for expanding and enriching the debate that you mentioned about digitalization, allowing for the consumer dimension, which we will return to later, so we see that this is really, very complex and really rich, and The combination of factors of course makes this interesting but very complex and I like to go ahead and ask Simone Mori about the electrification line and because his company is one of the companies of largest public utility in the world investing massively in renewable electricity now, could you share with us your opinion on the results of the different models and the different scenarios and, in one question in particular, which sectors do you think we really need to accelerate electrification? and do we really need to increase electrification rates? to reach 2050 and what do you think is feasible the um extreme net zero scenario or do you take it more as a theoretical exercise that can bring us some ideas simone no, thank you very much max, thank you very much for your work, thank you?
Thank you very much, Bruno, for inviting me and participating in this interesting discussion about the studies, which yes, it is very ambitious, very ambitious, and this will probably push us to try to put together different solutions for different time scales, so This is what already mentioned by the people who spoke, so when we look at what's happening in the carbonization pattern and we think we're very confident that by 2050 carbon neutrality will be achieved in Europe, but we're also very I'm very confident that a Part of the answer already lies in the events that are happening today in Europe.
I mean, renewables and electrification are part of the market, they are not part of the scenario. You know you see the development of renewable energy as by far the cheapest way. to produce energy all over the water, you see them in that, you don't know, in the long term, in the city center scenario, you see them in the results of tenders across Europe, like record low prices, you know, as a result of the tenders. electrification of transport is not in the picture, I mean the directive uh or the commission money in the list of the car manufacturers if you get into a car, you want to buy your car and you see the other cars are presented to them, basically, more and more electric cars, but this is a problem that has already been solved, there is no water and no stage, of course, the stage is the speed of evolution of this trend, which is critical, as just mentioned, of course, I mean. the ability to have more efficient and effective permitting processes is very critical to achieving what doesn't change the label but 2050 just 2030 for renewable energy and of course the speed of adoption of electric mobility.
You were making the point of The choice of direct equalization is a critical consequence of the evolution of infrastructures and the evolution of battery storage technology in batteries, but I mean that maybe there is a situation, you know, that this does not It is a long-term scenario. We can discuss this book even if it is underway. being in 2022 2024 is very short term, long term, so I would say that all of that, along with energy efficiency, which is an important part of the story, is the enormous and incredible opportunity that comes from energy efficiency, especially in the residential segments in Europe. there is no short term regret clearly present in the market issue it is not a question of talking about long term pictures here it is not about how the market is meeting the excuse scenario of course we look we look at electrification as the main driver The extreme scenario is very close to the scenario that represented its electric, it was presented by Mckinsey.
It was an external analysis and we really believe that by looking at the cost of the Mckinsey commitment, which is quite a relevant topic, I mean we have to compare the cost efficiency of the difference now I think we are quite confident that the final result by 2050 It won't be very far from the eastern electricity scenario, so I also understand that we have to start now to discuss a world through this idea. sector complement basically means how to put electrons and molecules together. I think they understand that there are many molecules. I just want to comment on this because it seems pretty strange or borderline fantasy to me, the idea that we could run, you know, 122 gigawatts dc on biomass without any impact, you know, booming on how biomass could work, I mean. , it's a number that is I think five times the commission's most extreme scenario, I think this is completely outlined and it's kind of a fantasy, and I say that having done quite a bit of work on ccs application for energy sectors, I'm not saying that . that ccs is not going to play a role, it may have a role in some specific application in the future, we don't have to be, you know, ideological, but going back to your question, I think that management education will pay a significant I think your scenario of reference is probably quite rare with the potential of targeted electrification in transportation, so I think the number of electric vehicles is lower than we expect and much lower than we can expect.
I think the impact. in terms of infrastructure development, it is much less critical what the study says, that is, we see, we see, uh, the need for evolution of electrical infrastructure, as you know, we are talking about the first years, which is basically a period quite long time. being you know, you just know, the acceleration of the natural evolution of reinforcing the electrical grid with a lot of digitalization, you know, digitalization in some ways is not a capital intensive step and we see a good complement coming from molecules, especially for the heart. debate sector to complement the battery in terms of long-term storage of there are a lot of global developments that will surely be able to start thank you very much uh maxim thank you very much simone for making some very specific statements and also to question part of the report because it is about As a lord, we have to investigate things that we must challenge.
You talk about the great potential of electrification and that the next net zero scenario is possible and there are others. to say that it is possible, this is very important and of course having a debate about that and also about the technologies because you know our researchers say okay, we need everything we have to make sure we reach net zero by 2050 and, Of course, that could be the case that some technologies fit more or less and this is of course part of the debate, but thank you Simone for those comments and I would also like to give the floor to our last finalist and then we will start the debate.
I think you are the latter and you have heard a lot of ideas in the reflections on this research and I am very curious to hear your vision and your point of view as a national regulator, of course, on the findings of the model, but also if you can put a little light on what the consumer perspective might be, you know, when we talk about sector coupling and rapid decarbonization to reach net zero in 2050. The word is yours anagra, yes, thank you. maximo and thank you for the interesting study and debate that we are about to have and uh yes um uh let me say that I agree with what Antonio said of course uh the perspective of having energy system integration and even the broader perspective of integration of the economic system is is It is absolutely necessary to reach net zero and of course we call it hole in cr but also in in v nets.
Here we apply this full systemic approach which takes into account the interconnections between the sectors and also the broader sectors like integrated transport and heating for example, so I think also in the various recent strategies and communications of the European Commission I think that Everyone agrees that the integration of these systems, as it is now called, is key to achieving the overall goal. of climate neutrality or net zero or decarbonization um however, I tend to agree with what the previous speaker said, some of the um assumptions and the model seem to be uh let's say no uh or seem to be a little bit inconsistent in the outcome and also in the modeling scenarios as such, particularly as you mentioned or address the consumer perspective, I think that's something that of course we would introduce into the system and we couldn't find where or how. flexibility comes, for example, from the perspective of the demand side, from the consumers, from the users, how this is properly integrated into the equation, so to speak, it has a lot of, let's say, a perspective of technology and production or operators , but it does not include all the actors. and we think that this is something that would require a little bit of recalibration, so to speak, to say the least, and with this I also come to the fact, I think, of another point that we totally agree with as regulators and I recently said it also in an electrical event of the euro that there is with the growing participation of renewable energies, which is a key factor, of course, and the increasing integration that we all aspire to, which at the same time requires more flexibility, but from our perspective it seems that some These aspects of flexibility are not 100 percent captured in the way it's modeled and now I mention that it's nice to have a nice word like spatial flexibility, but I'm sorry, this is just a simple infrastructure investment.
That's fine and certainly also, as I said, we need, of course, to restructure and expand the networks to actually align them with more decentralized production, for example, and that's exactly it, but also with reinforcing certain transmission lines. In general, for example, to connect offshore wind energy, I mean, we are doing this in Germany, for 10 years we have been trying to do it, let's say, with our energy policy change in 2011, I mean, we just celebrated last week the 10 years of Fukushima. or held in inverted trading, of course, so just to say, we are very aware of this, but we should not, let's say, call something flexibility that is not flexibility, spatial flexibility is a term that is an authorism, I would say, and With this it becomes a bit inconsistent in terms of attributing something to flexibility, which in the end is considering investment in infrastructure without taking into account that potentially less investment in infrastructure is needed if new forms of flexibility are taken into account in the original. sense of the word, so maybe it's something I should clarify in terms of scenario, calculation and the way we do this here, the next thing from this, of course, we would also say it clearly as regulators and I will point you to two recently published articles at cr we do not believe that this requires a, let's say, a breakthrough or what I would prefer to call the decoupling of the good regulatory principles that worked well last year during the crisis, but also in general and were confirmed in the clean energy package and the network needs to be regulated, there has to be dynamic regulation, we absolutely agree with this, but for example in Germany we already have incentive regulation to give the right incentives here for efficiency and a role that reflects costs , yeah, so I say I think that's nothing new and exactly these ideas have also been confirmed with the clean energy package and very much favor the focus there to tie it to the fundamentals, basically a market driven. regulatory approach that tries to get price signals right where they had been potentially distorted, say, through subsidies or the like, so I think that's exactly what the clean energy package is about, already taking into account to achieve, of course, not the new climate goals, but Of course, they also intend to achieve the goals by 2030 and adjusted the system on the electricity side as necessary, which basically also means that it confirms the unbundling and access rules from third parties and we, as regulators, strongly agree. to this in particular also because we see, and this is what we just published in our cr white paper series on regulation, the future regulation of hydrogen and the future regulation of gas power, we see that these activities are activities based in the market and therefore this requires that the unbundling rules according to which operators must not own gas power or hydrogen production assets must remain clearly separated, which requires unbundling rules, so there we see than what has been started with the clean energy package, let's say, adjusting the regulation of the third part of the third package of the internal energy market to the need to take more into account climate objectives and, inIn particular, also renew the increasing proportion of renewable energies, etc., I am not using the word mirroring, but it should also be extended to the gas side. in the decarbonization package that comes taking into account what the commission has already said in the various strategies that they have recently published, including the draft regulation 10e, where some of these elements are also correctly collected, let me finish by saying that also in these two articles agree that we need to take a look at the definition to make them consistent with each other, but we don't see that this is, say, changing everything or putting everything upside down or upside down.
Sorry, so we think that what is the clear message from our side: yes, develop the regulatory framework where necessary to guarantee and promote the integration of the energy system, but do not change the fundamentals that worked well, thank you, thank you, thank you Anna, great and Yes, yes, I think it is very interesting what you are saying because this debate about we have the clean energy package, this is the basis that we still have to implement as long as we have an EU green deal and we have to come up with a new regulation that we will come to and how far we will go, so you are giving your opinion here.
I want to remind all the participants that they play a fundamental role in Sear, representing all national regulators in Brussels. Now I would like to give another one. Extra 10 minutes for discussion because we were planning to start the second session and now, but I will extend the time a little bit, so one of the first questions I'm getting I think here on my mobile is about From consumers to consumers, there are different actors asking questions. When we look at all the scenarios, in some of the scenarios we see that a large investment could be necessary not only for the electricity but also on the other side, so a question for Antonio if there, um, when, when you are forecasting, when you are Looking at the numbers, are you worried about who will pay for such an important investment?
I would like to ask the same question to Simone and also to um to um, Mr. Verkamen, can you? Start, can I start? Antonio, can you answer that question? Yes, thank you, thank you Massimo. In fact, I want to say that consumers are at the center of our reflections, at the center of our model and at the center of our policies that we see. the European green deal and the FIFA 55 package as part of a broader growth strategy and as part of the EU's broader recovery efforts that will have a long-term positive impact on consumers, citizens and society As a whole, if we look at the numbers, for example, and how I mean how the costs of producing renewable electricity have decreased in recent years to become, in some conditions, the cheapest way to produce energy, so that, at the end of the day, this is a This is a trend that is important for us to continue, which is why we have also created one of the reasons why we have come up with the energy system integration strategy, because for us it is not just about of carbonization as such for the sake of carbonization.
It is about doing it in a cost-effective way and we are convinced that by implementing the energy system integration vision and agenda we will be able to achieve the best possible results in terms of profitability, but also in terms of consumer participation and commitment to energy transitions. those that can reap the benefits of the energy transition. Having said that it is clear that there are some regions and some parts of citizens that will likely be more affected by the energy transition and that is why having specific policies in place to target those groups, such as the jazz transition mechanism or specific policies of energy poverty to target those groups that are most vulnerable or at risk of energy poverty.
Thanks antonio estimone, your reaction to this, oh yeah. Basically I agree with what I have been saying again, we have to take into consideration that the first is that clearly, change, any evolution goes to the movement and decision of people, clients, citizens and there is a revolution. That needs full participation of citizens and the type of approach that the commission gave them to promote a very rapid decarbonization is very wise, the time is now, I mean, we cannot rest on the possibility of the convergence plan. I mean there are a lot of resources that need to be put on the table to basically do things to prepare the infrastructural evolution that is needed to meet the short-term steps, basically I'm thinking about the battery charger infrastructure, what are they? the clear limitations today and I want you to start preparing the technology for the step the day after tomorrow, which is again how to update, address how to prime the sector, and I think it is a this.
It is very important that we take into account cost efficiency because, at the end of the day, people, to be active and participate in this revolution, want to see a pattern that has to be efficient so that it has a relatively slight impact on the costs of energy. and we believe this could be achieved by reducing the cost of energy. This is a study that we carried out, but it is clear that acceleration will basically reduce other costs for European citizens, so in some way, or in any case, it is also clear that what is needed now is to go deeper into the scenario or about entry costs about today, you know, the order of merit or this different technological solution, on the other hand, we have to find a way to have full participation of people again, energy efficiency goes. people I mean when you decide that you want to establish your house how you want to establish your house what type of technology you want to implement to have more advanced management of your energy needs to upset your personal spending uh, purchase decision, this is the same when If you decide to buy an electric car instead of a robotic car, this will create problems during the transition.
Yes, of course, we have regions in Europe where we depend heavily on coal and I think. That idea again, the European Commission of the European Union is taking a very sensitive approach when it says that part of the resources have to be focused to guarantee that the transition in this region has to be quick, relatively quick, this will not come overnight. but it has to be relatively fast but it has to be as smooth as possible thank you, thank you simone um eve, do you agree that we are well equipped to make such large investments and still protect, say, low-income citizens or those regions that will have difficulties for the majority, how do you see that discussion?
In fact, we will have to do it. I don't think it's a secret that the energy transition will cost money and it's something we shouldn't hide, but we should make sure that this doesn't affect energy. consumers as such because otherwise the energy transition will not happen, I think it is a fair statement that must be taken into account, but what I think is very positive is the fact that the momentum is right now, you see people Moving forward using subsidies or non-subsidies depending on the situation, I also subscribed to what Antonio said that the green deal is an excellent instrument to begin this transition.
Billions are going to be invested in the necessary infrastructure and the necessary technology to be able to comply as quickly as possible. as possible these new forms of energy in the cheapest way because, again, that should be the goal, we should make sure that this energy transition is done in the cheapest way, which means technology, which means infrastructure, which It means integrated planning, which means looking forward, which also means Starting with pilots but with the ambition to expand them, not just doing pilots for the sake of the archives, but really having the goal of ending up with a system that can offer it in the cheapest way and I think that should be our main goal. objective, thank you, thank you very much, there is also a quick question for our professor, um, related to cost efficiency, could you tell us if in the different scenarios, but in the variants that you have created, net zero, there are massive indicators of, Let's say more? or less profitable, variants based on their model or are more or less along the same lines because I think the message is clear from all the speakers, there will be costs that consumers will need to find solutions for some type of consumers because Europe is a demographic area complex and what does the modeling say?
Well, I think you know, first of all, you know the conceptual framework for the model. You know that it defines the lowest cost solution depending on the set. of input assumptions and obviously we present a reference scenario with the best possible set of assumptions that we work on and then, you know, we will obviously try to take our system, as I said before, towards one extreme or the other, you know, changing . some of the cost assumptions of basically, you know, doubling or having some of the costs of the key technologies that you might know, push the energies towards the net zero energy system towards it the other way, so, let's take a look. glance.
In this case, you know in particular an explicit comparison, but just to say that you know the set of assumptions in each of the reference scenarios, obviously you always find the optimal solution in terms of the generation and the investment. and therefore this is, given those kinds of assumptions, is the lowest cost, given all those assumptions, okay, thank you, thank you very much for that, unfortunately, I need to close this session because we need to move on to the second one, I would like to. to thank each of you for your participation and for your contributions, of course, this is the starting point of a long discussion that we will have this year and the coming years and I would like to give the floor to bruno for the introduction of the second session thank you very much for joining us thank you thank you maximo thank you simone antonio pascal eve and gret uh for your contribution I hope you can stay with us but anyway we move now to Let's move on to the second part and it is clear that we cannot dissociate the results from the modeling of the possible regulatory and policy frameworks to achieve net zero, so I suggest that we move on to the second panel that will address these, but before that.
I would like to ask my colleague Professor Pollitt to share with us in 15 minutes the guests of his 41 recommendations that conclude this report, Michael, thank you Bruno, it is a great pleasure. be a part of this seminar and let me once again thank my colleagues at Cambridge, especially um kong and my colleagues at sar for all their help with this project and thank our sponsors for all the contributions they made. I've been into modeling so I'm going to present to you what we've been thinking about in terms of recommendations and we have a lot of recommendations in our report, of which I'll give you one Both in the context of the recommendations and in some of the recommendations specific in itself, I think the takeaway is what I would like to emphasize, which picks up on some of the things that our speakers have already been saying, but maybe we should say it.
It is much clearer that net zero remains a very unlikely outcome for the European economy by 2050 because it involves the achievement of very ambitious targets involving the implementation of multiple technologies on a scale we have never seen before. Even for the existing technologies that we know about, the continued scale of the rollout is still wildly ambitious and therefore it is not, it is important to say that, it is also important to say that our model is a model of how to decarbonize the current one. electrical system of electricity, gas and energy in Europe. If the economy, as we hope, continues to grow, then the scale of the decarbonisation challenge will only increase, so it is important to say that, as we model the year 2050, we are not saying.
This is probably what we're saying: this is an internally consistent set of model results that gives rise to, we hope, an internally consistent set of policy conclusions. We are not saying that they are easy to achieve. Well, and I think I would. I want to emphasize that, as we have already heard, renewable electricity will be fundamental to the decarbonization of the European economy, we are going to need massive scale technologies that we have not really seen before, including those that we think about in our modeling of synthetic methane, synthetic fuels to from electricity, carbon capture and storage and hydrogen and just to emphasize again in our modeling, we ran an extreme electrification scenario that is not enough to get to net zero based on current cost assumptions um on the different technologies that are available . and current assumptions about the technological characteristics of electricity and the need for storage and the underlying variability of renewable electricity generation that will be dominant by 2050, so it is important to say that an extreme electrification scenario does notwill be enough to get us to net zero emissions and that's one of the things that our modeling reveals and therefore that there are all these other technologies that scale up is absolutely essential to achieving net zero and one of the ways that We illustrate it by running this 90 decarbonization scenario, which is already very ambitious, it already contains a lot of electrification, especially of light transportation, and we see the difference that moving to 100 decarbonization really makes and that's where things like the massive expansion of cc and The development of hydrogen becomes very important if we want to reach net zero because these difficult to decarbonize sectors, particularly in transport and heavy industry, become important.
In our modeling, which is based on the input we have from our stakeholder group, we see that We will continue to use methane in the existing methane network, but that methane will have zero carbon and methane emissions. We also show in our model that fossil fuel prices continue to make a difference. What kind of results could be seen if methane from fossil fuels? was actually cheap, that would lead you to produce hydrogen from methane by cracking the methane and capturing the CO2 if we expect green electricity to continue to be much cheaper, then you would see the methane and hydrogen that we make. use some renewable energy so fossil fuels make a difference in what kind of energy system you see emerging as the lowest cost energy system.
The other things we emphasize is the need to expand the existing and the new. uh technologies um and uh achieving the successful scaling up of some of these new technologies as Kong particularly emphasized hydrogen and the technologies around biomethane and the continued scaling up of wind and solar energy um and the scaling up of wind continues to be very , very ambitious to meet our our net zero emissions goals and of course when we make policy recommendations we have to start from where we are now, one of the things that I think became clear from our model is that if we want to get to net zero emissions, and hydrogen emerges as important and zero carbon methane remains significant in the system.
What we envision is that we would have two separate systems to deliver that because the methane network would continue to supply many homes, for example, and smaller commercial customers, while the hydrogen network that would be built from scratch would supply heavy customers and would produce hydrogen for use in transportation and I guess the other thing we want to highlight is that what we model is 2050, we don't model the path. to 2050 and of course the path to getting to a net zero economy is going to be at least as difficult to chart as the outcome itself to 2050, okay, so that's just for context, now let me give you a some of our policy recommendations and I think we've heard some of these things already, but it's important to emphasize them again.
The European Union already has an ambitious set of policies in place and those need to continue and be strengthened, you know that it is important that we expand the current carbon price, the existing single electricity market, the existing single gas network and that we continue to work on how we set the price and value flexibility within the system. We continue to support the massive role of renewable electricity. Those are existing policies that must continue and we must continue to support energy efficiency. Energy efficiency is still, in theory, by far the cheapest policy and we must continue to work hard even to stay where we are.
In terms of energy consumption, electricity is key, electricity works well in any net zero scenario, and if it is cheaper to produce renewables it will work better, we foresee a big increase in cross-border electricity trade, so in contrast , we see Um, cross-border methane trade is declining because people will produce their methane and indeed their hydrogen locally in what we model, but electricity will be heavily traded across European borders and increasing cross-border trade capacity would seem be very important. We do raise questions about the organization of the gas system and about the integration of electricity and gas and about the price of the gas network.
You know one of the really difficult issues in net zero is going to be that demand for energy will be suppressed. But we are going to have these multiple new investments, more energy carriers and lower volumes and how we recover the fixed costs of the energy system and who they are allocated to will be extremely important and will raise very, very difficult questions about cost allocation and we suggest that real integration Ownership of electricity and gas can be very useful for sharing cost allocation and spreading costs among customers, but there are certainly big problems in terms of gas system coordination.
It is evident that the commission must work on the definition of gases. You know what constitutes a green gas, a blue gas, and a gray gas, and of course try to spot anyone who's trying to play with the definitions, because people are going to inject all kinds of gas into their network, like we imagine it. It is important that these gases are well defined so that we can have genuine single markets in them and we will also need to regulate both methane and hydrogen storage and that raises conventional questions about the price of on-road storage, particularly the network costs with regarding storage.
Hydrogen, you know, seems to be important at the net zero level because we need a high strength fuel, especially in transportation, but also in industry um and hydrogen has the advantage that it can be obtained from a green source or by cracking methane conventional with um with ccs um and that having hydrogen raises issues about how the hydrogen network is financed and what the initial uses of hydrogen might be. It may be very important to look at developments in specific countries. We have heard some mention that Europe already benefits substantially from the global energy market and it would be very helpful for Europe if a global hydrogen market emerged and we could get cheap sources of energy. hydrogen from some of the countries that have hydrogen strategies and where there might be cheap hydrogen, whether green or blue, available and we should watch and encourage developments in those countries, closely, what can the EU be doing in the short term ?
Have you heard that you know the union is interested in doing some of these things? A plan for the joint decarbonization of the electricity and gas sectors is clearly necessary. One of the big standout successes of the last 20 years has been the renewable energy policy of the To everyone's surprise, okay, and certainly to my surprise, and it would seem that if we really took deep net zero seriously and thought that hydrogen or biomethane are going to be really significant in net zero, we need similar Targets to boost those gases initially, so renewable gases targets would seem to be a sensible first step towards achieving this.
Zero-carbon transportation is important in all our scenarios. They will not be enough, but they are an important step and the promotion of zero carbon transport, both light and heavy duty, remains absolutely essential to achieving net zero um and encouraging the continued expansion of cross-border infrastructure to encourage um. the promotion of really high levels of renewable electricity that we saw in our core net zero emissions scenario, we have 81 of variable renewable electricity that will require a lot of interconnection and sharing of electricity assets across Europe, and I mean that is a legitimate concern people He tells me, well, you know, hydrogen, isn't that just an excuse for the current methane producers to say we'll give them the hydrogen, but we want to use methane and then they say, well, CCS are too expensive?
Why not? But we will end up using methane but converting it to hydrogen and still releasing CO2. Clearly, we need to prevent that from happening and the union needs to make sure that doesn't happen. This happens as we develop hydrogen, so where do we go? You know, right now we need to scale this up and we need to prove that it works at scale, so there is large-scale innovation around sector coupling, the joint integration of electricity and gas. These new technologies that we foresee will be very significant. This must happen very soon for 2050 to stay on track.
That doesn't mean we won't see some variation in Member States' policies or that we should. I don't see any variation, we've modeled what should happen in the 28 EU countries plus the UK, but you know that doesn't mean that individual countries can't decide whether they'll just have hydrogen and not. In the case of biomethane, the point is that it doesn't really fit the whole European level according to our model, but some variation at the individual state level might be possible, and in fact it would be encouraging if it promotes overall biomethane achievement. zero and we need to do more to encourage gas transmission and distribution system operators to engage in the transition to consistent net zero gas and in the short term we have already heard mention of reviews to European emissions trading. system that we very much support and have another opinion report that we support and the extension of the EU emissions scheme to transport and heating, that must happen, as must greater coordination of energy taxes in throughout Europe so as not to distort the choices between fuels. in electricity and gas and as we have already heard mentioned, covert recovery package 19 could be used strategically to promote net zero and there is more to do in terms of understanding citizens and their willingness to accept government and intervention and to accept the behavioral change that we have seen demonstrated on a large scale in response to coved and when we know that our youngest citizens are really committed to net zero and we know that they have had a very difficult journey in uh, in covid and you know We have the obligation to make this happen and to think seriously about how European policy can promote this and, frankly, how older citizens can pay for this to create the cleaner environment that our younger citizens really want, so thank you for Listening and I encourage you to read our 173-page report, which took us a year and includes an incredible amount of detail and input from our stakeholders.
I look forward to hearing the debate. Thank you very much, Michael. I think so. Much more than food for thought, this is the source of many proposed ideas and this is what we are planning to do with our panel now, so let me introduce you to some very distinguished panelists. We are pleased to introduce Mr. Martin Peterson, member. of the european parliament and vice president of the idre committee uh we have francesco del pizzo head of network development and strategies at law firm tso of italian electricity camila palladino executive vice president vice president of strategy and investor relations at nam tso of italian gas welcome camilla we also have massimo richie, head of herrera's energy division, the italian regulator and of course, last but not least, catherine levo demonstrates, uh, excuses, you will excuse my french strategy director at jrdf grdf, french cast, dso, welcome everyone, so let's start with vice president peterson, um the European parliament, in particular, your committee will play a key role in the so-called Fit 455 package.
From your point of view, the recommendations presented in the sales report Of course, we have seen some of your comments in the first session. Do you see challenges for some policies that may affect citizens and consumers? Well, thank you very much and, first of all, thank you for inviting me to this great debate. And I want to congratulate Professor Polit On for this study. I think the issue of sector coupling and integration is absolutely key if we are to fulfill our ambitions and get where we want in terms of climate. objectives, so I think this is a very important and very difficult issue because, politically speaking, everyone wants to do this.
I mean, who would oppose the integration of the sector? Nobody in the right mind would do it, but obviously the devil is in the detail and it is very difficult to do and I will say a few more words about this, but first I will touch on some of the issues that that political professor concluded or reviewed in his presentation. and I took note of the problems that I mentioned because they are all in one way or another on the table in terms of legislation right now or will be very, very soon and, generally, in the year 2021.
We will see a tsunami of legislation on the table that will leave the Commission and reach the table in the committee or in the European Parliament in general, and myThe concern from a sector copy perspective is, politically speaking, are we going to get it right in terms of ensuring that we have the right holistic or systemic approach to all of these very exciting issues and this is absolutely key and extremely important to do again if we want to address it correctly. this question of coupling and integration of the sector at the moment, personally, I have It is a pleasure to be a Roberto in the marine renewable energy strategy and we are starting to draft our proposal and, at the end of the day, the issue of marine renewable energy It's very much a matter of sectoral coupling of integrating electricity into whatever, whether it's hydrogen or powertrax or cross-border, for that matter, that's very much on my mind, I think we also have to address, to some extent, all problems. related to heat, I mean we have excess heat that is used, it must be used as well and keep in mind that we are talking about hydrogen or x power to ensure efficiency and the first principles of efficiency and all these uh uh right darkness , so To speak, I take note of what Professor Polis says that electrification in the studio is not enough.
An extreme electrification scenario is not even enough to meet our goals, but we surely have to strive for it. I think there are ample possibilities. recognition politically speaking of the importance of electrification and ensuring that we electrify to the greatest extent possible, as you know we have a very, very big discussion about hydrogen, there would be critics who would say it's this height or it's real, uh, I think en It's fair to say that hydrogen is attracting a lot of attention at the moment, but everyone is wondering what the demand side is. Where is the demand?
It's enough to drive this extremely important development, I think some. From the issues that were mentioned in the ets, we will soon see a major debate on this and everyone knows how difficult it is to reform the ets because we would have all sectors and stakeholders complaining about the stability reserve and then keep free quotas, so if we have to see an increase in quotas on prices, which I think we have to see, I mean it's going up, but it has to go up more to reflect a real and true price. We keep talking about pollution, but we know that there will be stakeholders and strong stakeholders who will oppose this and try to maintain any kind of privileges that they may have had previously, so it will surely be a big discussion as well.
I noted also the increase in cross-border capacity in terms of transmission infrastructure, we have just completed the negotiations on the Connecting Europe Mechanism and we also reflect this or to some extent we try to address it, but I can add to this that one thing is increase cross-border capacity, but we also have to make sure that we use the existing cross-border capacity to the maximum, which obviously relates to the reform we did of the regulation of the electricity market in the previous mandate and the 70 ambitions in terms of trade cross-border, so I think asa has a role to play in this, ensuring that we also trade cross-border and that, as well as investing in new capacity, we also make sure that we use existing capacity for the To a large extent, because again, when Asus market reports are considered, it is very clearly illustrated that we do not use the already existing infrastructure to the extent that we should, we do not have an internal market, we do not have real smooth flow and cross interaction. border electricity trade starting today we could go much further on this and we have to make sure that we have the policy and regulatory tools in our arsenal to make sure that we do that, primarily and basically to further integrate renewables into our networks electricity and therefore in our energy system, all this to say, by the way, we are also going to review the regulation on detainees shortly and, for sure, this must take into account all these interesting possibilities in the coupling of sectors and systems integration.
So when Professor Polit mentions all the discussions about hydrogen and the infrastructure dimensions and perspectives in this, this obviously has relevance in terms of the small regulation and the subsequent discussions about projects of common interest and all these discussions about electricity and gas . So let me conclude now. Sorry, sorry for being so long, but it's very exciting. I think that, politically speaking, our big challenge from the European Parliament side will be to get an overview of all the existing laws that we will see in 21. and let's keep in mind that the green deal, I think it's about 50 pieces of legislation, it's gigantic, it is so ambitious, so great and exciting, and if we do it right, Europe will be the only continent in The world has such a broad and critical mass of regulation in this important area and I think it is a great division and perspective and it is going to be very difficult to ensure that we get coherent legislation and therefore obviously facilitate system integration and sector copying.
You really want to start the discussion thank you, sorry, thank you vice president, no, I think it was great because it's very inspiring and despite the thousands of pages of regulations and discussions that you will have, that's your job, you seem to be quite optimistic . And you also see that the advantage is having Europe in the lead and being the favorite, of course, it will have a huge agenda and I'm sure the next panelists could help us think about all the proposals that Michael presented in these slides. So let me now turn to francesco del pizzo uh francesco um your company is also investing massively in italy to modernize the grid and prepare the country for further electrification and not only domestically but also of course to connect to other countries, So, from your perspective, what are the essential policies and regulations to ensure that development and help carbonize the European economy.
Thank you very much for the invitation to this meeting. We appreciate the opportunity to share some ideas about our sector and the challenges. For the future, first of all, in general, we very much agree with the results of this study, which of course, as Mr. Paulette says, is based on the goal of achieving net zero emissions, not on how reasonable the goal is. goal is efficient, but in general we agree that direction is much more important when looking at the crystal ball scenario, the same things that in 30 years many things can happen, the most important thing at this stage is to understand If the direction is correct and we completely agree on the fact that this is the right direction and the main decision is completely agreed, so the scenario that we have to challenge is a scenario in which energy is mainly generated with renewable energies, then we can discuss. about the level of transformation from to gas or something else, but in general we agree on the fact that in 30 years 80 percent of the energy in general will be generated by uh by energy and of which 80 will be renewable, so , in this scenario, I think we have several challenges from a technical perspective.
A system that runs on near-food renewable energy is completely different from one where we have traditional generation providing a regulation service. greed and security services, so in this scenario we definitely need to invest like Europe, not just like Italy or this country, because we have completely interconnected networks, so the security leader depends on the security of the country and vice versa. I need to develop a strategy to download the dso to operate in a video where the capacity of the aircraft is completely different so the voltage regulation must be provided completely by the grid alone because no one else can second regulate the safety . services, reserve and storage capacity and all other services must be sized more at the European level than at the level of a single country because, to the extent that we move forward as a single country, of course, each country creates the challenges of security. from minimum capacity control to regulation marginal production would be suboptimal, so we will get a capacity solution for itself, the fronts will do the same and Germany will do the same at the end of history if we want to be efficient as a community and as continent we need to invest in a system that is creating a direction in the market where capacity can be shared between countries and according to level. connection that we have today and that we are developing in the electrical system, we can definitely introduce efficiency into the system to the extent that we can share resources between countries instead of building it ourselves. the necessary capacity for the needs of each one, so this is the first point in which we must invest so that non-traditional technology regulates greed and the second in which we must share resources between countries in order to have an efficient system.
At the same time, the challenges are what is the structure of this market, because this market will be completely different from the fundamental one, compared to the current one, today we are working in a market that is driven by the variable cost of production to the extent As we produce 80% of our energy through renewables, we will be driven by capital efficiency and the abundance of wind and solar resources because at the end of the storm we will. pay the capital investor by the main investors in rubles, so this type of market has fundamentals that are completely different today, so a market that is completely spot, that is, linked to the concept of that variable cost will define the cost, probably not. completely aligned with the underlying assets, so what is the market of the future?
Definitely a market that reduces risk for investors because efficiency will be related to the payment of capital and to the extent that we will have a policy that allows the reduction. of the risk to investors, the cost of energy will be lower, it is a fairly easy question, but to the extent that we will give a commercial risk and other risks to the grid, to the conversely renewable, more The capital investor must be paid and the cost of energy will be higher. It will be a problem for the development of investment itself, so today we have the opportunity to plan for the long term and during long-term planning we must understand that to the extent that we build an efficiency market that further reduces the risk for investors, we will get more in terms of efficiency, reducing the cost of energy for everyone, the other element that I really appreciate the comments related to. to the necessary infrastructure also for the gas sector and definitely, if we want to invest in and to complete the net zero emissions footprints, we need to invest, of course, in hydrogen and other technologies that are more related to gas.
At the same time, we must understand what is the most efficient infrastructure because everything would be paid for by the people, so what is the most efficient solution in this scenario is a scenario in which we distribute, transport the energy with the electrical grid and then distribute with the gas distribution or is it something that was at the transportation level, a ready gas and hydrogen infrastructure is needed. This is a question, I don't know the answer, but definitely because of politics and we definitely need to plan like a wall we need. We cannot continue investing thinking about the electricity sector separately from the others.
We need the policy and scenario alignment also at the infrastructure level to understand if what is the infrastructure mix that is required. That's all. There is space for everyone. It is also a great opportunity for investment and GDP to grow and employment and, for everyone, the important thing is that it is an opportunity to make it efficient, otherwise someone would pay the b at the end of the story, thanks Francesco, sorry yes In the interview, yes, thank you very much for that, I think it's interesting. When you highlight, you know how we imagine the market of the future and how we make it a reality, considering and taking into account who will pay for this transformation, so we, we.
We are talking about an infrastructure, let's say a game to plan for the future, we are talking about the interconnection of two systems that are not necessarily connected and I think this is perfect to ask a question to our next panelist, who is camila palladino, who represents Islam and because your company Camilla is studying hydrogen very closely and I think the possibility of creating a moiety in Italian hydrogen that connects with other markets was mentioned. Could you now explain his perspective on a large gas infrastructure group, one of the largest, and how? What is important is regulation to exploit the technologies that you see will help the carbonized economy and how the report helps you get intoThis thinking, like Francesco said, what's the most efficient way to get there.
Thank you so much. Thank you so much. For the opportunity to speak, this is a very interesting study and you know, we have been long supporters of the hydrogen opportunity, the green gas opportunity and we think this emerges very clearly. In the study, it was a 33 percent share of green gas. gases and modeling um and we think that this represents this this shows that you know that getting to net zero without a strong presence of green gas is probably not possible and that accelerating them uh saves you money on the way there um we also think it's very It's interesting What Francesco says is that we recognize the role of infrastructure networks, both gas and electricity, in helping us go green and achieve net zero emissions and, in particular, we appreciate the value placed on the infrastructure network. gas, especially in a system. where there are large scale renewables that are cheaper in parts of Europe or even imports and, in fact, in terms of further development areas of studying new iterations of the model, we think it would be interesting to try to differentiate the cost of renewables in different areas and deposit the emergence of large-scale resource-rich areas both inside and outside Europe.
Meanwhile, we also see in our modeling the emergence of complementary hydrogen and methane networks. In Europe. You know, no. I don't think the combination is a forever solution, but it may be an intermediate solution and we would like to highlight here, as we have done in the past, that the hydrogen network can be repurposed from existing gas infrastructure and That's what Snam said. Before that, 70 percent of your pipelines are already hydrogen-ready and that would be what you know, which gives you an idea of how the evolution might happen in terms of policy recommendations. I think we would support the need to continue encouraging renewable energy.
We would plant large-scale renewables in the best areas of Europe or secure and insure all imports. I think there is a need to ensure that cost regulation and regulation are in place to allow for the massive ramp-up of hydrogen, biomethane and CC, I hear. Michael talking about possible renewable gas targets, and you know, we've been thinking about that too and we think it would be a useful, useful way to try to get these green gases off the ground. There are very interesting points in the study about large-scale gas energy installations and how those necessary to couple the gas and electricity networks are known and how one could plan where they would be located and whether the role they could play needs to be regulated. the TSOs and we think this is a very interesting debate, because obviously the electrolysers will serve a purpose there in terms of connecting the networks and generally we welcome and agree with the concept of closer coordination and planning between the Gas and Electric TSO, as Francesco says, the efficiency of the overall solution is very important. um, realizing that this is going to come at a cost and it's going to be borne by the consumer, but presumably um and and You know, the way that you evolve these networks to make them as efficient as possible.
It's something we must solve together. Tanner and Snam already work together on joint sets. So we're used to working together and we're. start working together more closely and just a broad point about cost recovery and you know who pays for everything, which is addressed in the report and it's a very interesting concept and I think we would agree with the idea. that it is important that the price allows the system value of the different options to emerge, so clearly this will be an area where we will need to work on that's all. I, thank you, thank you Camila, I think that in some ways you complement a little bit what Francesco said and it is also very interesting to see that your companies are also thinking about the future together and of course analyzing the challenges when considering cost recovery.
Looking at the location of the infrastructure and I think this is very important, it is an important message also for our decision makers in Europe, with that I think I would now like to turn to Massimo Richie, who represents the Italian national regulator, who is also involved in contribution to this research. um Massimo, I think we've heard a lot of feedback about consumers and also in the previous session there were some highlights about that and the importance of making the EU green deal, if we want, still acceptable to everyone. different consumers in Europe, but could you tell us from a national perspective your perspective on, let's say, Michael and Tim's main proposals and those that might worry you or if you have some reservations and explain why from a national point of view? perspective of the maximum national regulator, yes and thank you very much, first of all for inviting me to carry out this debate that has been so interesting so far, but I am sure that also for the rest, first of all, these types of studies in these phases in which we are trying. to find out what the system will be like in 20 or 30 years, so I think it is very, very important to study a lot, even many more than what we are actually doing at the European level because, too often, Look, we take some scenarios and some results, rather than being the result of hydrogen with 11, and I think this should be the result of optimizing the system in an efficient perspective without imposing too many restrictions on the optimization process.
This is something that you sometimes see when trying to do a simulation, so these types of studies are very welcome from my perspective and, one point I wanted to highlight, there was a reference earlier about the costs to consumers, uh, for all this process, the carbonization process, net zero until 2050. What we are experiencing in Italy is that this is very important to understand and a question we are trying to ask ourselves is: is there something important and can it be done? General fiscal policy should also be used in this regard because we believe that it is really very difficult to manage the types of tariff networks to cover all these types of costs without the large distortions that we are already seeing, I think in Italy but in Germany.
Furthermore, I think there is a big distortion due to the fact that we invest between 40 and 50 euros per megawatt hour to finance renewable sources in the valuable cost of electricity for consumers, which is a big distorted incentive for self-consumption, for example , etc. and the further we go down this path, the more I think it is important to ask these kinds of questions, we ask ourselves the question. In Italy, to see, we had some contribution from fiscal policy during the Covid period, you know, and that was delivered to clients specific of specific destinations to overcome the three, uh, a month, the three most relevant months of the greed period, but I.
I think we should ask this question in general also because tax policies are much more flexible in determining what type of clients have to pay for what and, perhaps, you know that you have to worry about poverty and everything in a way much more flexibly than the types of energy and gas can actually be achieved so I think this is a very important and relevant question for the policy or the policy that we are in, where we are, we are discussing, discussing about uh , so, about uh, about uh, you. We know a little bit about hydrogen, uh, I think we all know at least about the fact that renewable energy imports come in a free way, so what we're trying to do with carbonite gas is try to find other uses or decarbonize other sectors that are not and that cannot be decarbonized into electricity, so the importance of gases, are there gases?
The importance of carbonized gas is related to the fact that it is a kind of enablement for power. renewable sources or sources to reach a consumption that is not easily recognizable in other ways, so when we talk about colossal fighters, I think it is very important to think about the best color, green, with respect to the potentials of hydrogen to enable other types of consumption, so hydrogen should really come in, you know, the energy sector is already completely decarbonized, so I think it's a very important discussion because it's kind of an incentive that will be there for uh wine or or yeah green hydrogen perhaps and it is very important that it will be there to give the real sense of the potentials of the green gases to the series system otherwise It is very, it is very, very difficult uh um yes, I think Unegret already summarized the position of the European regulator on a model that is a very important part of regulation today and will also be in the future.
We think there's a lot of room for competition in the decarbonization of the sector as well, so I think we think it's very important to maintain the abandonment concepts even in the future and a few last words on the studies that I started from, um, yes, we, you. I said before that you took a look at the 2005 picture, I think in the future to develop studies, I think it's also very important to understand how we got there because, as the recent past shows us the overall cost The cost of achieving carbonization It will largely depend on how we get there.
We have seen it in Italy, for example, in the laboratory in Europe. I think in the last 10 years we have been investing in renewable energy and now we are paying three or four times over. the cost that we will pay now to make the same investments and now it only means three four years after where we actually made the investment and it is true that the decreasing cost is also due to the fact that we invested there, but I think we should have been in a certain way in having a more efficient part, so that is the first point and the second point is very important to understand what to do in the near future because the technology is changing very quickly, the cost of technologies is changing very quickly, so It is very important to have a picture of 2050, but I think it is also very important to understand where to start.
I think that the policies of organizations should be very flexible in themselves to be able to adapt, so that we do not need to understand now where to start. invest now in what we need in 2050, but we have to start investing now in what we need to get there and that is a much more complex question than then, you know, there is room for many studies that I think Thank you very much, Massimo , I'm sorry to interrupt because we lack a little time, but I think it is very interesting because you touch on complete tariffs and you touch on taxation and also at the European level in the entire dimension of consumers and technologies, which, of course, enriches this debate and with That's what I would like to give the floor to our last finalist, um katherine.
I think your company is obviously always very proactive in investing a lot, especially in some specific cities and regions. And I would like to hear his perspective on, of course, the proposals that Michael made, but also a question for you: do you think that sectoral coupling is ultimately the way forward for the entire continent or do you think it will be implemented? more to particular regions and sectors in let's say locations it is a more local issue the word is your schedule okay good morning everyone and thank you for this opportunity to share with you first jodef I would like to thank very warmly and congratulate the Syrians for all the academic research work that has been provided is impressive and very impressive because there is a very new intellectual approach and my first point would be to say that according to Sherdf, one of the main findings of the study is and a main recommendation would be to closely examine its intellectual approach and that should inspire many energy policy makers because it is beneficial because it addresses the issue of energy with four new main steps and ways, firstly, it provides various scenarios with an open mind and a complementary mixed technological approach there is no buyers there is no monetary approach and that is quite new and should inspire a lot of policy makers and it also considers many different parameters, not only the carbon challenge but also the security and the cost of supply, and that is very, very, very important. a new way to establish a new energy scenario, so thank you for all this work that should be done and the first recommendation lies in this new intellectual approach that should be considered very closely by many policymakers in all countries. recommendation we also want to highlight the importance given to the flexibility approach, we think that flexibility solutions are very necessary to meet the objective of integration of the energy system and also the different flexibility options offered by the gas vector and in terms of power to the mechanism of gas or hybrid heat pumps and I wanted to share our agreement with many of the recommendations of this study which lies in the focus on efficiency in the gas sector that should be promoted with the installation of hybrid heat pumps, so that is a key .discovery and we really share it.
The other finding is that we also agree that all renewable gas production should be scaled up to biomedical hydrogen and synthetic methane and we also think that it should be accelerated and we promote it with other Europeans. gas distributors the establishment of a target at the European Union level for renewable gases would be a way to encourage the development of renewable gas uh this is the third point that I would like to highlight and that matters a lot is that the study compared to many others is providing the network costs, at the distribution and transmission level, including the cost of the electricity network, and I think this is a great milestone that should generate more discussions on how to calculate and how to reduce the cost of energy networks for the benefit of the entire community. and that is very new, I think it is very rare in many studies to have such a deep analysis of the real total cost of the different options and that is very, very important and the fourth point that I wanted to highlight and that should inspire a lot of work going forward.
It is important that energy policy makers evaluate and value the value provided by flexibility services, from the gas network to the electricity grid and I believe that in order to value flexibility and many different energy options should be possible. be very important at a local or general level, so with respect to your question, depending on the sector coupling, we think it is a key leveraging approach for the global energy response to net zero carbon emissions if we think that sector cooking should be recognized at a general level. At a general level, at a European level, it should be reduced according to all the specificities of the different geographical areas, so we promote different regulations, policy recommendations and one is to effectively support the integration of the sector and review the directive of 10 regulations.
Thank you, Catherine and Don. I don't know if you can hear us or if you just froze, but yeah, I'll continue now. Thank you for your reflections and we still have some time, a few minutes for the debate and one of the questions that What we can see in the system and I would like to ask our member of the European parliament who participates is that, on the one hand, we say that Sector coupling is something we can build and you know we have the clean energy package and we have to adapt. If the commission said the same thing this morning, the question then is whether we see some member states taking the lead on some of the technologies in some of the policies.
If we take hydrogen, we see many members trying to take the initiative. Is that normal? Do you see it as a challenge for the European Commission in parliament and the institutions to make sure that the finalists and those supporters who want to, to a certain extent, have problems when implementing? Sure, I want to say that this cannot be a challenge, but, on the other hand, I also think it is important, given the sensitivities of energy policy and this is the political sensitivity in the member states, that there are also dynamics of countries or regions that lead by example, so I would also be a little concerned with a one-size-fits-all approach to some of these issues because, for obvious reasons, there are very different preconditions as to, I mean, what kind of energy mix a country would have. particular member state, what the local opportunities would be. or best practices in terms of sectoral coupling and this will obviously vary widely across Europe depending on where you are and what your preconditions are, so I think we should be ambitious, I think we should push, but I think there also has to be some space for member states to discover what the best solutions will be.
What we can't have is nothing happening, so I think we should phrase it or spin it positively by saying yes, we can and should take inspiration from leading countries or regions or whatever and then leave some space, but don't leave space. for inaction because we simply do not have time for this again if we are to meet our overall climate goals. Sector coupling is absolutely necessary. So in that sense, I would put pressure on member states to do the right thing, but what exactly the right thing is would obviously vary depending on local conditions. Thank you thank you thank you.
That was very comforting. We'll have to close now. But maybe. Give each finalist the last 20 seconds to answer this question. Do you think that the EU will develop a sectoral coupling regulation and thanks to that we will lead COP 26 or future COP meetings? Do you think that is feasible, yes or no? So, let's start with Catherine. Sorry, yes, of course, I think it's doable and I think the first sector coupling is an intellectual framework and several different ways of looking at the energy system and I think this is a general framework intellectual approach that should be rejected on a country-by-country basis. . to be suitable for each geographical area, but I think it is visible, thank you, I'm sorry, but I didn't hear very well when you were asking the question, but I agree with that with the first answer, so I think I think.
Understand it later, I'm sorry, Camila, your answer is yes, of course, I think it is feasible, I think it is already starting to happen, both with the discussions that exist about the renewable gas objectives to reduce or the growth of green gases, um as well as for the debate that is ongoing about ways to stimulate joint planning and coordination between the different energy sectors, so of course I think it is feasible, francesco, yes, it is a challenge, but it is feasible, At the same time, we must monitor, harmonize all. the regulation that we have right now, so the real challenge is not to get any new regulation for docking, but the goal of making a monetization between what we have today and that is very, very challenging compared to where we are today .
So yeah, but yeah, but thank you and maybe Michael, your last final comment after hearing this and then I'll move on to Bruno and well, thank you, just to say a big thank you to everyone who contributed this morning, and I think. I think technically it is likely that we can reach zero. Yes, I think it's politically likely. I still think not. Me neither. I think we know we want to emphasize that this is incredibly challenging and time is very short and we and I guess. The one thing we would emphasize about our model is that in a sense we all have to be in this together, we can't start discarding each other's technologies because if we start doing that we potentially jeopardize net zero and I think that's one of the the clear conclusions of our modeling but thank you again everyone thank you michael thank you all thank you very much thank you all uh it's interesting your last statement is interesting uh michael uh we are friends we colleagues not necessarily I need to agree on political events.
I must say that I am more optimistic. I want and I want to be. I think this is the concept. And Catherine Lubul has stressed that sector coupling is clearly an intellectual concept, but I think this is something that will surely become a reality and lead to profound changes. What I can agree with you on, Michael, is that it will certainly be necessary. This is decades away and I think her report and this morning's debate have underlined that the key questions will be precisely who will support the transformation and how they will do it. So if I could, I would, maybe, if I could.
I can share five brief comments on that, first of all, clearly and I think you underlined this in your report and with Kong, net zero remains an extremely challenging policy goal from a technological point of view and it is a challenge because it involves precisely the launching multiple new technologies at scale and we're talking very specifically about uh res and biomethane uh hydrogen and ccs and I think you make a strong case in your report when you demonstrate with your net zero scenarios that unless an unforeseen technological breakthrough appears in a Next future. A failure on the part of political decision-makers, if any of these key technologies are not scaled up, would simply block the path to achieving the EU goal of full decarbonisation by 2050.
The second point is that, while Decarbonization is clearly the most important driver of the fundamental transformation of the energy system, which should be planned. We should not limit it, and I think that is clear in your report just on the energy system, but we should broaden our review and our plans. For the future evolution of other fundamental sectors such as industries, mobility and heating, third point technologies will play a fundamental role and their evolution will have to be integrated into long-term political thinking and we have to combine infrastructure markets, incentives, regulation and policies to maintain our ambitions are realistic and I think that is clear from the masterpiece that you are presenting.
The fourth point is about citizens. I mean, we've mentioned it. This morning, Max asked a question. In this sense, policy makers cannot forget the citizens, who are energy consumers and, to be honest, I think it is simply unacceptable that in the second millennium energy poverty remains a reality and this must be adequately addressed in policies. of the EU at the same time as the broader questions of the distributional impact of current and future climate policies and several panellists this morning have recognized that in saying that this and the fifth and final observation have a cost, we clearly need to continue to review our policies and regulations.
Policymakers and design regulators will not necessarily immediately find the right solution, the right policy, the rights, the regulatory provisions, so regulatory sandboxing, which is something that we have been promoting in various sectors and which is based on Trial and error, this may be appropriate in some specific situations and I fully appreciate that this may run counter to the regulatory stability that the private sector requires to invest in innovative technologies and make a difference. I believe, however, that it is imperative that the industry rises to the challenge and continues the conversation with regulators and with policymakers and the conversation about the coupling of the sector and its role in the decarbonized economy in particular, this is precisely why which we are also here and we are present to facilitate and fuel those conversations, so I would like to thank you all for your participation and for your support thank you to our authors uh michael and kong thank you to our sponsors and the members of those who have supported this and they really helped us uh and sometimes and we I've heard it this morning, they don't agree and this is normal, they don't agree with everything that's in the report and clearly some of them have different views on some of us In some aspects and others, I think this is part of the way we work and that is why we are eventually influential because it is clear that what comes out is based at the same time on the reality of their different businesses because it is fed by their contributions. and It's also how we heard uh politically timely and of course uh completed in its entirety uh and sometimes very difficult uh defended uh independence uh for o o researchers uh thanks also to the panelists thanks to our viewers uh we hope you enjoyed The program was a little long , but I think it was worth it.
Michael and Kong's report is available on our site for analysis, and as I mentioned, video of the event will also remain on the service and on Sarah's YouTube channel. Find the calendar of Sarah's upcoming activities online. I hope we can count on you again soon until then, take care of yourself and others, goodbye.
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