Recently, the European Commission published its Electrification Action Plan, outlining the EU’s targets for electrification, along with fifteen different actions they must take to achieve them.
Upon reading the statistic that the EU was only 23% electrified, while Japan and China are closer to 30%, it got me thinking: how close are we to a fully electrified world?
And what does that even mean?
As demand on the electricity grid increases can supply also rise to meet this challenge
Amy McEwen Thought Leadership and Strategic Programmes Associate
Electrification, explained
The Cambridge Dictionary defines electrification as ‘the process of making a machine or system operate using electricity when it did not before’.
So, when we talk about ‘global electrification’, this means taking processes or things which are currently powered by fossil fuels, such as oil or natural gas, and transitioning to power them by electricity.
We can electrify a lot of the systems we rely on day-to-day, and indeed, we are already seeing progress in areas such as heating and cooling our buildings, cooking, transportation, and energy infrastructure (e.g. the National Grid).
As demand increases for heat pumps and electric cars, not to mention data centres, our challenge is making sure that the electricity grid can also rise to meet this challenge.
Why electrify?
We know that human activity and the energy we consume is the unequivocal main driver of climate change.
We also know that the burning of fossil fuels for energy is the largest chunk of the pie, accounting for 68% of global greenhouse gas (GHG) emissions and 90% of all CO₂ emissions.
And while it is a good thing that we are increasingly using decarbonised technology powered by electricity, it’s worth highlighting that two thirds of that electricity is still generated by burning fossil fuels (with the other third being generated by a mix of wind, solar and other renewable sources, emitting little to no greenhouse gases).
This is why we need to accelerate the electrification of energy infrastructure via renewable sources – but that’s for another article!
The last several years have been a global reminder of how volatile our fossil fuel supply is to geopolitical events; we saw fuel prices rise during Russia’s invasion of Ukraine in 2022, and they are soaring even further now due to the ongoing war in Iran and subsequent closure of the Strait of Hormuz.
It is clear that relying on fossil fuels isn’t only unsustainable from an envrionmental perspective, but also a political one.
The current state
With all these threats surrounding fossil fuels, then, you’d think humanity would be accelerating towards total global electrification, full speed ahead.
Well, yes, and no.
In my research, I’ve found that while there is, indeed, good progress being made, we still encounter a number of barriers in the energy transition.
While I plan to review global progress in electrification in future articles, I’ll start by focusing on the EU and the UK here.
Electrification in the EU and the UK
As I mentioned earlier, the EU is currently around 23% electrified (or more accurately, electricity has a 23% share of final energy consumption in the EU – (this excludes electricity consumed in the process of generation, or by fuel industries and transmission or distribution losses).
The UK falls slightly behind at 21% and while both UK Government and the EU Commission acknowledge what an important catalyst electrification is for energy sovereignty, environmental and economic prosperity, they face several barriers in making the transition:
- The cost of electricity: In the EU, electricity is, on average, three times more expensive than gas for businesses and two and a half times more expensive for households (a disparity known as the ‘spark gap’).
It is even worse in the UK, with electricity for businesses being 3.8-6.5 times the cost of gas, and around 4.3 times for households.
https://www.energy-uk.org.uk/publications/energy-uk-explains-the-spark-gap/ - Lack of upfront investment: The capital costs to switch from fossil fuels to electricity are still very high for many consumers, businesses and industry.
- Slow uptake of innovation: Myths surrounding renewable technologies, as well as gaps in skills and knowledge, also prevent mass-scale adoption.
The cost of inaction
These are just some of the hurdles the EU and the UK face when it comes to electrification. That doesn’t mean we should give up on that journey – in fact, continuing to rely on volatile fossil fuels comes at a significant cost. The EU could save up to EUR 260 billion per year by 2040 on its fossil fuel import bill by reducing imports of gas by more than 70% and crude oil by more than 40%.
Meanwhile, by going beyond current government plans for EVs and heat pumps, the UK could save up to 80 million barrels of oil and 1.5 billion therms of gas in 2030, which would cost £8bn at current oil and gas prices.
And of course, the environmental consequences of continuing to burn fossil fuels are bleak; as the latest report by United Nations Environment Programme (UNEP) highlights, globally, we have not cut GHG emissions fast enough to avoid tipping global warming over the 1.5°C limit of the Paris Agreement.
Where do we go from here?
It is abundantly clear that we need to accelerate electrification for cheaper, more secure energy moving forward. To do this, we need to address those three main barriers to electrification with the following solutions:
1. Make electricity cheaper – why should low-cost energy and decarbonisation be at odds with one another? We need to make the lowest carbon fuel the lowest cost, which will mean taking actions like moving levies currently on household and business electricity bills into general taxation.
2. Incentivise investment in low-carbon technology and assets - there are a number of grant schemes in the UK and across different EU member states for residential users to install heat pumps, but many of these are temporary solutions and in an ideal world, we wouldn’t need to rely on grants to make them economically viable. Instead, we need to encourage heat pump uptake by, for example, implementing council tax reductions for households with low-carbon heating, and providing corporate tax reductions for businesses.
3. Bridge skills and knowledge gaps surrounding renewable technology – cutting through the noise of oil and gas lobbyists, climate skeptics and NIMBYs has been a challenge for the renewables sector for decades. We need more awareness campaigns led by governments and think tanks, as well as educational programmes for future generations to understand the benefits of an electrified world, powered by renewables (such as Mitsubishi Electric’s Learning Curve scheme).
What all these solutions imply is this: we have the renewable technology we need to accelerate electrification in the UK and the EU.
We now need the regulation, infrastructure and education to enable that technology to do its job, and provide us with energy that is low-cost, low-carbon and secure.
Amy McEwen is a Thought Leadership and Strategic Programmes Associate
