Electricity and gas coupling in a decarbonised economy

Europe needs to reduce greenhouse gas emissions three times faster than the current rate; a challenge which, for the European Union to succeed, requires the deployment of all currently identified forms of technology and flexibility, as well as a joint effort from the electricity and gas sectors.

The EU could be a frontrunner in the global energy transition, reaching net zero by 2050, but this will require an enormous effort to integrate the energy system whilst continuing to meet demand. The integration of the energy system, known as sector coupling, is commonly understood as integrating the energy consuming sectors (such as buildings, transport and industry) and optimising them with the energy supply sector. This CERRE Energy & Climate report focuses on coupling between electricity and gas supply systems.

“We remodelled the European Commission’s 1.5 TECH and COMBO scenarios and took them further with two additional, extreme cases. Our conclusion is straightforward: European single markets in electricity, methane, hydrogen and carbon are essential to fully exploit sector coupling in the pursuit of net zero”, explains Chi Kong Chyong, co-lead author of the report.

As the debate heats up in Brussels and the European Commission is preparing its Fit for 55 Package, this report aims to make a landmark contribution to the discussion, presenting the outcomes of a pan-European state-of-the-art energy optimisation model and developing four possible scenarios to achieve deep decarbonisation by 2050. The authors shed light on the thorny path towards net zero, proposing a menu of more than forty regulatory and policy recommendations – ranging from the key role played by electricity, to options for organising the gas system, and including both the role of the EU and specific countries.

“We explore and discuss the fundamentals of existing policy and regulation such as carbon pricing, the key role of electrification and hydrogen, the re-organisation of the gas system, and options to finance sector coupling”, highlights Professor Michael Pollitt, one of the report’s authors. “Our recommendations represent both disruption and adjustment but overall, the mass of changes needed to enable all technologies and markets to reach 2050 net zero is significant.”

The outcomes of this report were debated on Tuesday 16 March, 9:30 CET, during a CERRE webinar “Reaching net zero: scenarios and regulation to rethink sector coupling”.