The European Green Deal

How engineers will be affected by political goals

12 Years of Political Milestones for Climate and Energy

On 13 April 2016, scientists published a paper about the consensus on consensus for human-caused global warming. Six independent studies were presented to show that 90%-100% of publishing climate scientists agree that humans are responsible for the recent global warming. This is in very good agreement with the more well-known 97% statement from 2013 to which people often refer.

This should be an indisputable statement on the cause of climate change. But why should engineers care? Because recent political measures which have been implemented in light of these findings will affect the technological journey that lies ahead of us and engineers are going to play a major role in that story.

Before we dive into the details, let’s have look at the most important political milestones so far:

The very foundation of all upcoming political actions is the Paris Agreement, signed on 12December 2015. The UNFCCC agreed to try and limit global warming well below 2°C above pre-industrial levels, and to increase efforts to keep it below 1.5°C. To put that in perspective, we are standing at 1°C above pre-industrial levels with an increase of 0.2°C per decade.³

Now, the discussion turns to greenhouse gas (GHG) reduction goals.

Until 2009, the European Council had already set three major goals for 2020 and 2050:

• 20% energy shares from renewable sources by 2020,
• 20% reduction in GHG emission compared to 1990 levels by 2020, and
• 80%-95% reduction in GHG emission compared to 1990 levels by 2050.

On 22 January 2014, the policy framework for climate and energy was presented. The policy’s centerpiece are the intermediate targets for 2030:

• 40% reduction in GHG emission compared to 1990 levels and
• 27% energy shares from renewable sources.

But that was not enough. On 28 November 2018, the European Commission defined its vision for a climate neutral economy under the title, "A Clean Planet for all". It was officially submitted to the UNFCCC in March 2020 and it states that the EU strives for

• 32% energy shares from renewable sources by 2030 and
• net-zero GHG emissions by 2050.

So this is where we were standing in 2019. But obviously, this article would lose its charm if the story ended here.

Facing Reality in 2019

In October 2019, the EEA published trends and projections in Europe to give context to current developments. Here, we want to emphasize three major datasets:

• The developments of renewable energy shares in the EU from 2005 to 2017 and respective projections up to 2050,
• The GHG emissions in the EU from 1990 to 2017 and respective projections up to 2050, and
• The energy consumption by sectors from 1990 to 2018.

These graphs will give us a basic understanding for interpreting the latest developments in 2019 and 2020 regarding climate and energy politics. They also reference to the exact targets that were described so far. Let’s have a deeper look.

Figure 1 shows the current developments of renewable energy in gross consumption percentages. With a share of 17.5% in 2017, the target of 20% in 2020 was still within reach. But the report also states that a slightly faster pace in 2019 and 2020 is still necessary.

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The report also analyzed the progress in greenhouse gas emissions which are shown in Figure 2. Here, the trajectory shows a positive projection to meet the criteria for 2020 but the estimations after 2020 are too slow to reach a decrease in GHG emissions of 40% by 2030.

But how is this going to affect us as engineers?

Based on data from the EEA, Figure 3 shows the development of CO2 emission equivalents without LULUCF (Land Use, Land Use Change and Forestry), which has a general positive impact on the numbers. If we look at the three largest sources of CO2, we find energy supply (2018: 2907 Mt) with more than 75% to be the greatest source of GHG emission by far.

If energy, which is mainly rooted back to fuel combustion activities, is such a large factor, then maybe we should dig a little deeper to understand what exactly is causing the emission. Figure 4 shows the distribution of some more detailed emission categories. Here we see that the whole energy sector can be split into four more informative categories:

• Energy industries
• Manufacturing industries and construction
• Residential households or commercial and institutional buildings
• Transport

Strikingly but not surprisingly, the emissions of energy industries and transport define a major block within the energy sector. Of particular interest may be the share that car traffic has in general transport emissions. As you can see in the smaller diagram in Figure 4, cars are responsible for more than 50% of transport emissions in 2018. If we add heavy duty trucks and buses to the equation, we are already gathering more than 75% of general transport shares.

I hope that at this point, the picture is getting clearer. The technologies and infrastructures which need to be developed and built within the next 30 years to achieve international CO2 emission goals are heavily driven by engineering companies. Therefore, these goals will have a tremendous impact in the life of every engineer. It can thus be understood as a common lifetime aspiration to share amongst all engineers of the world.

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The European Green Deal

Now it’s time to have a look at the namesake of this article: The European Green Deal.

„I want Europe to become the first climate-neutral continent in the world by 2050.”

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- Ursula von der Leyen, President of the European commission, 16 July 2019

That statement is a key pillar of Ursula von der Leyen’s candidacy speech on 16 July 2019, which she gave before becoming President of the European Commission the same day.

So, the EU obviously wants to get serious and the key tool to success is going to be…

the European Green Deal.

The European Green Deal which was presented on 11 December 2019 is the EU growth strategy that aims for a resource-efficient economy. Generally speaking, the European Green Deal plans to push the key activities that are shown in Figure 5.

The EU wants to become a role model for climate change activities. This should not only show how climate change can actively be pushed without compromising economical growth (at least that’s the hope) but it will also give the EU the First Movers Advantage in technological evolution. In this way, the EU is fighting for industrial leadership in green technologies.

Since I don’t want to go too much into the details of every single activity, let’s at least scratch the surface of three larger initiatives under the European Green Deal that were kicked off so far:

• One key part of the European Green Deal is the European Climate Law which was proposed on 4 March 2020. It would write the goal to become climate-neutral by 2050 into European law. It also addresses the irreversibility of climate neutrality.
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• To drive the upcoming industrial transformation, A New European Industrial Strategy for Europe was adopted on 10 March 2020. Among other activities which support European industrial ecosystems in achieving their target of climate neutrality, it builds four industrial alliances for clean hydrogen, low-carbon industries, industrial clouds and platforms, and raw materials.
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• On 17 September 2020, the 2030 Climate Target Plan was presented. It proposes a more ambitious roadmap to become climate neutral by 2050. At its core, the goal is to decrease GHG emissions to a minimum of 55% by 2030 (from 1990 levels) which is a large step compared to the previous 40% decrease target.

It’s going to be very interesting to see how industries are going to react to the 55% proposal while facing their COVID-19 survival plans. They are obviously not going to like it as you can already see in German newspapers.

But there we have it again. Ambitious goals enforce change and change creates fear as well as it opportunities. Let’s see how economical and political debates will create the roadmap we need to tackle these ambitious environmental goals.

Talking about opportunities

Mechanical Engineering Industries

The study differentiates between five categories to reduce GHG emissions starting with measures (1) that can already be taken today and moving towards measures (5) that will be made possible with upcoming technologies:

At this point, I want to focus shortly on opportunities for engineering industries based on a German study that was presented by the VDMA and the Boston Consulting Group in 2020.

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In 2017, humans were responsible for an estimated 51 Gt of GHG emissions worldwide. 35Gt of these can be traced back to its respective sector quiet well. Figure 6 shows potential GHG emission savings by 2030 based on the data which was presented within that study. The savings are related to the international GHG emission data that gathers detailed sector information. Here, the OECD and BRIC countries excluding Mexico and South Korea were included.

In category 2, investments of 580 billion EUR in heat systems and recovery, 1.1 trillion EUR in building automation systems, and 290 billion EUR in recycling among others are necessary to implement already existing energy efficient technologies.

Furthermore, investments of 2.1 trillion EUR are expected in the field of alternative fuels e.g. synfuels and hydrogen or other P2X technologies (category 4). The construction of electrolysis plants alone is going to demand about 410 billion EUR of investment.

The study indicated that 5 Gt of GHG could be saved until 2030 just by increasing the renewable energy share (category 1) in energy production to 49% e.g. via wind and solar energy plants. As a comparison, Germany has already reached a 52% renewable energy share in 2020. This would demand an increase of 800% in solar and 400% in wind energy plants until 2030. This would cause investments of 2.3 trillion euro.

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So far, we've talked about investment from a global perspective. A study by BCG took a closer look at the potential abatement cost and showed that many measures can be taken that do not only reduce GHG, but simultaneously lower costs. These opportunities are mainly driven by on-site solar plants, renewable energy purchase agreements, and an overall increase in efficiency e.g. of heat systems.

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Let’s put it into simple words: There are some amazing business opportunities coming up on the horizon that are not only interesting from a growth perspective, but they will also be essential building blocks to save our human existence. To me as an engineer, this feels worthy to strive for.

Outlook and COVID-19 pandemic influences

The final BCG study heavily focused on the influence of recent COVID-19 pandemic developments. During the COVID-19 pandemic, we witnessed (and still do witness) dramatic interventions in everybody’s life. This, of course, does not only have tremendous effects on our day-to-day life, but also on the global economy. Adding these up, a GHG emission drop of 5% to 10% for 2020 is expected (see Figure 7). To once again put this in perspective: We need to keep up a 5% GHG emission drop to realize the targets of the Paris Agreement.

But here comes the bad news. The latest developments are not expected to be sustainable because they closely correlate with our still carbon-dependent limping economy. The worst part: Urgently needed investments into green technologies are at risk due to enormous investment demands caused by the pandemic. Furthermore, the price of gas and coal is dropping, which makes it very hard to build a business case on green energy. On top of this, the awareness of climate change competes against breaking news on COVID-19.

In conclusion, recent global developments brought on by the COVID-19 pandemic are going to backfire in the long run when it comes to our climate targets and it’s going to be a huge challenge to catch up with the initial plans. Unfortunately, the pandemic gave us no choice in the matter and now we are stuck with the consequences.

What are your thoughts on the role of engineers in reaching the goals of the Green New Deal? How should we react now that the pandemic has knocked us off course? Leave us a comment down below - we'd love to hear your thoughts and engage with you on this pressing topic.