In this episode, Michele Azalbert, CEO of Engie Hydrogen Business Unit, joins Joana Freitas to discuss the role of green hydrogen in the energy transition. Green hydrogen has created quite the buzz. From the European Commission’s ambitious roadmap for green hydrogen until 2050 to US President Joe Biden’s promise to use renewable energy to produce green hydrogen. Other countries like Chile, Japan, Saudi Arabia, and Australia are also announcing major investments in green hydrogen. Michele Azalbert sees hydrogen “as the missing link of the energy transition” as it would enable to store large quantities of renewables over a long period and to decarbonize several sectors, as industry, transport, construction and energy. Despite several false starts, hydrogen is gathering strong momentum as a key energy transition pillar. “Clearly, it is not the first time neither the second time hydrogen has been talked about, but we think this time seems to be different. Green hydrogen is not yet competitive. Today we are in the same kind of context, same momentum as we were 10 years ago with regard to Solar PV”. As Michele Azalbert starts to mention, green hydrogen emerges as an opportunity to decarbonize the hard-to-abate sectors. However, in the EU, the current estimated costs for brown hydrogen are around 1.5 €/kg, while green hydrogen costs around 2.5-5.5 €/kg. This competitiveness gap has been raising concerns on the financial sustainability of green hydrogen as a solution. In Azalbert’s perspective, “we have to go all together at scale now”, working both on the supply and demand side. Although the production of green hydrogen is not still economically viable, several energy companies are reinforcing their investments in electrolysers and green hydrogen facilities. Michele Azalbert touches on the specific case of Engie to explain: “The market is not yet there. Technical solutions are not yet available at scale and the customer is maybe not today willing to pay. However, at the level of Engie, we see ourselves as a hydrogen economy enabler. We need to activate the market.”

Zoë Knight, Managing Director and Group Head of the HSBC Centre of Sustainable Finance, shares her thoughts on the role of the Finance sector in the net-zero transition with Joana Freitas, Ambassador for the FSR Lights on Women initiative. The financial sector’s role in the global response to climate change will entail not only accelerating low carbon investments but also supporting the transition of carbon-intensive sectors. When it comes to investments in green renewable generation, investors’ appetites seem to exceed the volume of investable projects. Knight identifies a variety of reasons, highlighting that the “risk assessment for how strong the investment will contribute to solving climate goals isn’t truly reflected yet”. On the other hand, the hard-to-abate sectors, including industry, heavy-duty transport and agriculture, account for around 40% of greenhouse gas emissions but still attract limited investment. In Knight’s perspective, companies need to clearly demonstrate what their climate strategy is. In addition, green financial instruments, such as green bonds and sustainability-linked bonds, also have a significant role in the decarbonisation pathway. These types of instruments work as a transparency mechanism allowing investors to be clear on what the proceeds are going to be used for. Although the issuance of green bonds has been growing quickly, in 2020 it only represented 5% of the market. “There’s plenty of work to do from this labelled finance aspect because we need to drive so much capital towards low carbon outcomes”, Knight says. Governments may also signal to investors that they are taking their climate plans seriously by issuing green financial instruments. Knight considers that these initiatives are “a really powerful backdrop for privately-held corporates to be able to also be transparent about their financing as well”.

In this episode, Agneta Rising, Director General of the World Nuclear Association, joins Joana Freitas to discuss the role of nuclear energy in the energy transition. According to the International Energy Agency, in 2018 nuclear power provided 10% of global electricity supply and 25% of electricity supply in Europe. Although no new nuclear plants have been built in Europe in the last few years, Agneta Rising points out that the global scenario looks positive. In Asian countries, like India, China and South Korea, there is a growing number of new nuclear plants, while there are also newcomer countries, which is the case of United Arab Emirates, Turkey, Belarus and Bangladesh. Nuclear is a zero-carbon, dispatchable, baseload energy source, and in many cases at a very competitive cost. “We can see in countries that have used and started to use nuclear energy how they boosted their economy and how many jobs they also created”, Agneta Rising adds. However, in Europe, public opinion seems divided, especially after the Fukushima accident. Regarding the Fukushima accident, Agneta Rising notes that “nobody has died and there is no expectation that anyone will die because of the radiation” and the experience from this accident has been taken into account to upgrade the safety of every reactor around the world. “There is a lot of myths about the accident”, Agneta Rising says. In addition to the safety issues regarding nuclear reactors, environmental organizations, as Greenpeace, have been raising concerns on the ability to handle nuclear waste. In Agneta Rising’s perspective, countries with nuclear plants have been successfully managing nuclear waste since nuclear started producing more than 60 years ago. “It’s not a large problem and it’s not a highly technical problem. It’s more a problem of just getting political decisions, supporting and choosing a good site.”

In this special episode of Net Zero, Leonardo Meeus, Professor at Florence School of Regulation and Vlerick Business School, and Georg Zachmann, Senior Fellow at Bruegel, share their thoughts on how legislation and policy are enabling the energy transition in Europe. The special episode also highlights insights from an FSR online interview with Directorate-General for Energy, Ditte Juul Jørgensen, in which she discussed Europe’s green recovery strategy from the COVID-19 pandemic.

Back in June 2019, the European Commission published the last energy package – the Clean Energy for all Europeans package – aimed at accelerating the energy transition and giving all Europeans access to secure, competitive and sustainable energy. After this new legislative package, in early 2020, Ursula Von der Leyen presented the European Green Deal, a policy manifesto aimed at making Europe climate neutral by 2050. In Georg Zachmann’s view there are three key building blocks to achieve this ambition – i) set a carbon pricing mechanism to all sectors; ii) ensure a just transition, compensating those who somehow are negatively impacted; and iii) finance the transition, transforming the EIB into a European Climate Bank. A few months later to the green deal announcement, European economies start suffering record downturns due to the COVID-19 pandemic. To support Europe’s economic recovery, in May 2020, the European Commission launches the so-called “green recovery plan” putting climate action and energy at the centre of the agenda. Ditte Juul Jørgensen sees the European Green Deal as “a growth strategy in itself” and a “very useful foundation and starting point for the recovery that we are now engaging in”. The Directorate-General for Energy also points out three groups of energy policies driving this green recovery: i) buildings renovation; ii) scaling up renewables; and iii) system integration. In what concerns system integration and sector coupling, Leonardo de Meeus highlights the importance of “shedding some light on the grey areas of regulation”. While the path to climate neutrality and economic recovery in Europe seems challenging, particularly regarding public acceptance and equality across member states and income brackets of the population, Georg Zachmann refers to several studies proving “how easy it will be to have climate policies for significantly lower distributional effects”.

What role will Carbon Capture, Utilisation and Storage (CCUS) technologies play in the energy transition context? In this episode, Mechthild Wörsdörfer, Director for Sustainability, Technology and Outlooks at International Energy Agency (IEA), shares her views on the opportunities and challenges arising from CCUS technologies with Net Zero host Joana Freitas.

According to IEA, industry currently accounts for almost 25% of CO2 emissions and 40% of global energy demand. Continued economic growth and urbanization, particularly in developing countries, is expected to drive up the demand for cement, steel and chemicals. In Wörsdörfer’s perspective CCUS is “the only known technology to be able to put these sectors on a pathway to this net zero emissions”. She also sees a role for CCUS in the power generation segment, especially in Asian countries, like China and India, where most of coal power plants are still very young and able to operate for decades: “One of the options here is to retrofit them and put also CCUS on the existing ones to cut the emissions”.

The discussion around CCUS is not new; however, the achievement of the Paris agreement goals and the new net zero ambition for 2050 have been driving a renewed interest in CCUS, particularly in Europe. On the other hand, CCUS deployment is still facing public acceptance issues in some European countries. According to Mechthild Wörsdörfer the use of CCUS does not mean “business as usual for fossil fuels” as, even considering the use of this type of technologies, it is necessary to decrease the use of coal in power generation by 75% in 2040 to achieve the climate goals. CCUS technology “provides a bridge between the reality we are still having right now and certainly the need for urgent emission reduction”.

In this episode, Net Zero host Joana Freitas invites Andris Piebalgs, Professor at Florence School of Regulation and former EU Commissioner for Energy, to discuss how renewable energy is changing global geopolitics. While over the last 200 years, control of oil, natural gas and coal, as well as of bottlenecks in global sea routes (like the Strait of Hormuz) have shaped the world geopolitics, renewables are now expected to challenge this landscape. Andris Piebalgs sees an opportunity for those nations that have been investing in new technologies related to renewables, like China, to reinforce their global influence in the energy area. On the other hand, Russia and Saudi Arabia are pointed out as the countries where the energy transformation might be more difficult as “it will be very difficult domestically to change the pricing for fossil fuels”. In the specific case of Middle East countries, there are already some investments in renewables but mostly in the Emirates. In Andris Piebalgs’s perspective a change in consumers’ patterns might be a key trigger for these countries’ transformation – “If Europe will go massively for electric vehicles, then definitely, these countries also will be encouraged to make reforms”. Although China is the world’s largest producer, exporter and installer of solar panels, wind turbines, batteries and electric vehicles, Andris Piebalgs sees no reason to believe that Europe is changing from one type of dependency to another. Europe can always develop technologies on its own, while fossil fuels are clearly geographically located. “So my point is that definitely more renewable energy means more energy security, particularly for Europe”, Andris Piebalgs said. In a world where climate change is perhaps the biggest challenge, Andris Peibalgs also believes that the energy transition “definitely brings more peace”.

In this episode, Sonya Twohig, Director of Operations at ENTSO-e, joins Net Zero host Joana Freitas to discuss if the ownership of grid operators influences the delivery of the energy transition. Recently, some questions have been raised on which entities should own the grids. For example, in the UK, the Labour party announced a plan to take National Grid into public ownership (if it were elected Government). On the other hand, the Dutch Finance Minister has said he plans to privatize or sell off a stake in TenneT, as the company needs more equity to invest in grid upgrades. In Sony Twohig’s view, grid operators can work in a very positive way regardless their shareholder structure, as, in the end of the day, “what is really important is that the operation and the management of that grid is controlled and regulated by the regulatory authority that supports that grid”. Another issue that has been recently under discussion is the entry of relatively two new categories of shareholders: Pension Funds and State companies from countries outside the European Union. Regarding potential security concerns, Sony Twohig notes that those concerns exist “regardless of whether you have investors coming from outside EU jurisdictions or not” as some threats come from within the domestic country and are not specifically related with the investors’ profile. In countries where the TSO is fully private, as UK and Portugal, the issue of segregating the System Operator function has also been raised. Currently, given the integration of a large amount of renewables, the system operator and the network operator need to work in a much more integrated way. However, Sony Twohig considers that such integration “doesn’t mean that they have to be on the same business structure” and highlights the key role of regulators “to ensure that we do all work towards that one single driver [integration of renewables”.

In this episode, Auke Lont, CEO of Statnett, talks to Joana Freitas, Ambassador for the Lights on Women initiative of the Florence School of Regulation, about the key challenges around carbon pricing. The European Union currently has a mixed system to price emissions – 41% of greenhouse gas emissions fall under the Emissions Trading System (ETS), 7% are covered by carbon taxes and 4% fall under both instruments. Auke Lont considers that the EU ETS system “functions pretty well” and points out two improvements going forward – introducing a floor price and getting rid of free allowances. On top of that, Auke Lont also recognises the importance of specific measures outside the ETS scheme, particularly to accelerate innovation in getting CO2 out of the system. One of the key issues when pricing carbon is whether prices in different countries should be allowed to vary – a single price approach might have significant impacts on specific regions. The other issue is how to address emissions from different sectors of the economy – there are still a number of sectors not subject to emissions restrictions in EU, like Agriculture and Transport. At the same time, the transition to a low-carbon economy needs to be fair and just. “We should indeed try to link the fairness of the transition to the incomes which might be generated through the carbon tax system”, Auke Lont said. One of the most powerful measures presented by the new European Commissioner is the creation of a Carbon Border Tax. Auke Lont notes that it will force other countries to join EU in the climate change fight; however, the use of trade policy instruments might lead to retaliation. Consumers’ behaviour also play a very significant role in the transition – “it might be a catalyst for both industries to move faster in the green direction and for politicians to actually put more regulations or higher prices on carbon”.

In this episode, Elena Bou, Board Member and Innovation Director at Innoenergy, joins host Joana Freitas to discuss how startups are challenging the traditional world of utilities. The energy sector is going through a period of unprecedented opportunities for innovation and growth in lots of different areas, opening doors for start-ups and entrepreneurs. Elena Bou points out that, over the last years, batteries have become one of the most intense areas of activity for these newcomers. At the same time, start-ups have also been working on a wide range of topics, such as alternative ways of mobility and control of heat and cold using low-carbon solutions, which will directly impact citizens. However, as it was noted by Professor Henry Chesbrough, the father of the open innovation concept, “the future of the energy will require ecosystems of collaboration between start-ups and big energy corporates”. While in some cases, start-ups are helping utilities and energy companies to accelerate innovation and to solve specific problems, Elena Bou also notes that “many start-ups are working with utilities to explore new business models”. Utilities seem to be more open to innovation than in the past, but there are still some barriers to overcome. In Elena Bou’s perspective, the lack of new skills is one of those barriers as “these profiles, they don’t want to go to work to these type of companies because they prefer to work with the start-ups”. So far, we have not seen attackers from the tech world posing a real challenge to the energy incumbents (perhaps with the exception of electricity retail), but Elena Bou already sees companies like Google and Cisco as potential competitors and feels “a huge pressure on incumbents, particularly in Europe”.

In this episode, António Mexia, CEO of EDP Group, joins us to discuss the challenges that utilities are facing in adapting their organization, skills and culture to the energy transition environment.

António Mexia starts by noting that we are living in the middle of a revolution: digitalisation is totally transforming most sectors, including the energy sector, which was for decades a very traditional one. An open innovation approach is crucial in facing this new context, as “most opportunities will probably come from outside our walls, from outside the company”. In the specific case of EDP, of which António Mexia is CEO since 2006, the growth of the renewables business segment was one of drivers of the company’s cultural change – “People understood that everything would be different”. The need for a cultural change is now an issue for all the players along the value chain. Regarding grid operators, they have been mainly focused on the security of supply, but now they are also being challenged to change very fast to adapt to a much more decentralised and decarbonised system. In António Mexia’s view, the ability to become agile and flexible is key to address the technological and market disruptions that are coming. Moreover, he considers that attracting the best talent and committing to diversity are critical elements for energy companies to succeed. While it seems that not everyone is on-board on this upcoming disruptive change, António Mexia notes that this is a movement “clearly demanded by the society in the streets” with which companies will have to cope.

In this episode, EU Energy Commissioner Kadri Simson discusses the energy taxation policy in EU and the challenges behind a just transition with Joana Freitas, Ambassador for the FSR Lights on Women initiative. To achieve the level of ambition that is proposed in the Green Deal, the EU needs to set an effective carbon pricing policy. However, as Commissioner Simson notes, in some European countries, there are still some inconsistencies in the energy taxation system – there are cases in which taxation is more favorable to fossil fuels than to renewables. One of the most disruptive measures proposed in the EU Green Deal is the creation of a Carbon Border Tax.

As some segments of the population and some regions are particularly affected by this green transition, political initiatives, as the Just Transition Mechanism, play an important role in funding the transition and bringing the entire society on-board. Despite different starting points, the Just Transition Mechanism will be available to support all the Member States. “All around Europe we have factories that are losing their market share because of the technological solutions they are using”. Given the amount of investment required, national governments and the private sector will also have to contribute. In the Commissioner’s view, national governments should develop their own financing mechanisms as the “Green Deal is not only about protecting our environment, but is also a growth strategy”.

In this episode, Kadri Simson, the Energy European Commissioner, discusses the EU’s energy policy vision for the EU Green Deal with Joana Freitas, Ambassador for the FSR Lights on Women initiative. As 75% of EU’s greenhouse gas emissions come from using or producing energy, energy policy will play a major role in delivering the climate targets. Member States have been working on their National Energy and Climate Plans to set the targets and the action plan for the next decade. As they have very different starting points, the European Commission will provide assistance and financial support to those that are still reliant on fossil fuels.

In Part I of the Net Zero Special Edition with Commissioner Simson she discusses key pillars of the European Green Deal: ensuring no one is left behind, innovation as a driving force, and the importance of R&D for energy storage solutions.

Commisioner Simson also touches on the role hydrogen will play, stating “in the upcoming years, definitively the most innovative and exciting solution is hydrogen”.

Tune in, rate us and subscribe to never miss an episode!