16th January 2023

What are the main energy trends for 2023 and how can technology help us transition to a carbon free world?

We spoke to Thomas Gibon, Researcher in the “Life cycle sustainability assessment” department at the Luxembourg Institute of Science and Technology (LIST) who provided insight as well as five useful tips on how to live sustainably while saving money.

1. In terms of technology, what are the main energy trends that you foresee for 2023?

At a global level, wind and solar will continue to be deployed at unprecedented rates, probably exceeding new additions of 200 GW in solar, and 100 GW in wind power (see figure). Now this is still not enough:

1. investment rates have doubled since 2015 (from 350 to 700 billion/year) but they need to triple again until 2030 (according to the International Energy Agency) if we are to reach our global net-zero targets,

2. as the current winter is cruelly showing us, intermittency still occurs and as a consequence Europe is relying on coal and gas: investment in storage and flexibility is essential and clearly not yet up to the task,

3. in general 80% of the energy we use is still fossil, we need to electrify uses as we decarbonize electricity production.

2. How do you see the price evolution? In other words, what energy supply will be expensive, and which will be cost-effective?

The current paradox is that the costs of renewables keep decreasing but the price of electricity keeps increasing. To understand this, it is important to know that a grid’s electricity price is set on the costs of the marginal producer on that grid (i.e. the power plant producing the next kWh), which often happens to be natural gas, the supply of which is limited at the moment. Electricity is likely to remain expensive in 2023.

In addition, renewables do not produce much on windless winter days, and given the difficulties in producing baseload electricity (with some of France’s nuclear fleet under maintenance), reliance on coal and fossil gas keeps prices (and CO2 emissions) up. The grid of 2023 will also be deprived of a share of cheap nuclear power (France will still have maintenance episodes, Germany has nearly phased out and although Belgium decided to postpone its planned 2025 nuclear phase-out by 10 years, nuclear power production has been already reduced) which will also maintain prices up.

From a broader perspective, I think we start realizing that electricity is not a commodity like any other (you cannot store it, and you need to always match production and demand).The current pricing mechanism is probably not adapted because it generates wide fluctuations and does not promote long-term investments.

This leads some experts to argue that electricity is too important to be left to market mechanisms and should be regulated as a public good, thereby allowing long-term investments that could secure cheap and reliable electricity supply in the future.

Electricity markets are currently myopic, which is a problem as no long-term decision can be made in such a context.

3. How will the prices impact consumer behaviour around the world? Is there any hope for a carbon free world by 2050?

In many regards, energy is not elastic: people need fuel in their car for commuting, and heating their homes is not really a choice either. We have been accustomed to cheap and abundant energy for a long time, so it feels unfair when prices increase. I think many people only now realize that energy is necessary in every aspect of our lives.

On the positive side, we are finally talking seriously about sufficiency (“sobriété”) measures which can lead to substantial energy savings, such as lowering the heating temperatures or slower driving, with potential energy consumption savings of >10% each.

There are of course hopes to become carbon-free by 2050, but the implications in terms of policy, technical change, and behaviour are massive – and to be completely frank, not well-understood.

In Luxembourg, an average resident’s carbon footprint is about 15 t CO2 eq./year. If we are to reduce it by more than 80% by 2050, this not only means that our production system need to be much cleaner, but also that consumption patterns will need to change radically:

  • eating less meat (whether it’s local or not doesn’t even matter),
  • fly less or not at all,
  • renovate your house and choose a non-fossil heating system,
  • drive a smaller car (if possible electric).

These are all personal decisions that only citizens can make. The efforts required from all parties involved (government, companies, citizens) have to be complete and coordinated.

This demands a cultural shift: from individualism to a collective, broader and system thinking.

4. What do you forecast for Luxembourg? What renewable energies are the winners in 2023?

All renewable energies win!

First because this is indeed not a competition, all renewable electricity sources are welcome on the grid, and second, renewables are very far from being the main source of electricity, let alone of energy – the race has only started, and it’s a marathon, not a sprint.

We should of course invest as much in wind and solar as possible, but their shares will not be major in 2023, or even 2025. So in the medium-term, the main issue will probably be keeping our electricity low-carbon while we’re deploying renewables. To realize this, we need to look outside Luxembourg, since the country only produces 15% of the electricity it consumes.

According to the ILR[1] and the European grid operator (ENTSOE), in 2021, the main single source of electricity[2] for Luxembourg households was German wind power (700 TWh), followed by German lignite (charbon brun, 630 TWh) and Belgian nuclear power (570 TWh)[3].

Since 2023 will be the year when Germany phases out nuclear power completely, and Belgium will turn off two reactors – the question is: will the additional renewable capacity pick up the slack? Both countries have ambitious renewable targets, but Belgium has acknowledged that they will have to run more on natural gas in the next years, which will actually increase carbon emissions – and as a consequence Luxembourg’s too if we keep importing Belgium energy.

Germany looks better, as it just established a record in renewable power production in 2022, but still is not on track for its 2030 renewable target[4].

 


[1] Institut Luxembourgeois de Régulation

[2] in terms of country-technology

[3] France is only connected to industrial sites

[4] https://www.cleanenergywire.org/news/germany-sets-renewable-power-record-2022-track-2030-target

5. What are your five useful tips for our readers who want to be sustainable and save money?

If by “sustainable” we mean “low-carbon”, then as follows:

5 useful tips: 

1. Cars: avoid using individual cars, consider carsharing or drive an electric car. This saves money almost immediately.

2. Heating: If you rely on fuel oil or gas for heating, consider installing a heat pump or a pellet stove. If not properly isolated, upgrade your house. You save money in the long run.

3. Meat (especially red): Reduce meat consumption. It does not matter whether your beef comes from Brazil or Luxembourg, since most greenhouse gas emissions occur at the agricultural stage. Better for your wallet, your health, and for animals.

4. Travels: Train over plane. Purchasing carbon offsets for your flights is better than nothing. Still, you cannot easily buy your way out of emitting greenhouse gases.

5. Buy green electricity through a proper contract, i.e. one that is effectively linked with renewable power investments (e.g. enovos’ “nova naturstroum” or Sudstroum’s “Terra invest”). Avoid contracts relying on so-called “green certificates” as these have no effect on increasing renewable production capacity.

About the blog:

 

There is an urgent need for rapid transition to global sustainability. Business and industry have enormous social and environmental impacts. "Why does it matter?" is a bi-monthly blog that aims to elucidate this important topic through the eyes of our experts. 


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