"Energy transportation is the big issue to deliver the transition" (G. Dickson, WindEurope former CEO)

What was the renewables landscape like ten years ago in Europe and where are we now?

Ten years ago, renewables amounted to about 25% of all the electricity we consume in Europe. Today they are one-half. And if you add on the nuclear, zero-carbon electricity is now 70% of all the power we consume in Europe. That is great, but that is only the electricity; and we must bear in mind that the electricity is only 22% of all the energy that we consume in Europe. The rest, the other 78%, is mostly fossil.

The good news is that there is a very strong consensus now, contrary to a few years ago, that if we want cheaper, locally produced and green energy to improve energy security, then you have to significantly raise the share of electricity in the energy mix. Electrifying heavy industry in Europe is of crucial importance to reduce their energy costs, which are so much higher than the energy costs of their competitors in the US, China and elsewhere. The other piece of good news is that the technology to electrify is there, with electric vehicles and heat pumps.

The Industrial Accelerator Act, announced next month by the Commission, will provide further policy support.

The costs of electrifying transport, heating, and industry are falling, but not yet quickly enough. If you want to electrify or decarbonise your factory, whether you run it directly on electricity or on renewable hydrogen, it is a huge upfront investment. The Industrial Accelerator Act, announced next month by the Commission, will provide further policy support. Basically, it needs State aid and national governments to be a bit more creative in how they use State aid.

Is Europe lagging behind its competitors?

Europe is missing out. Only 22% of our energy system runs on the cheapest, most local and cleanest source. The equivalent number in China is higher than 37%. Their electrification rate is going up every year. Europe has set itself a target now to get to 32% electrification by 2030. We are not on track to meet that today. There is one policy measure, quite controversial, which is meant to help incentivise the electrification of domestic heating and individual transport: that is the second phase of the European Emissions Trading System (ETS Emission Trading System 2). This measure has now been watered down following the recent agreement of the European Council on the 2040 climate and energy targets. But that has got to come back, because consumers need those direct incentives. If you get the policy right, the economics will drive the change, and the economics show that it is always cheaper to run things, whether it's heating, transport, buildings, or factories, on electricity than it is on gas.

What are the stakes, geopolitically speaking, of the transition to renewables?

Geopolitics has been a feature of energy since the first oil crisis in the early 1970s. Fifteen years ago, Europe thought it would be supplying all its own solar panels, with a very nice industry mainly based in Germany. Today, it is gone, largely, to China. The European Union decided three years ago that it was determined to avoid it happening to wind too. The turbines are still more than 99% manufactured in Europe, with some components from China and some rare earths from China. We have 95% plus dependency on China for the rare earths and the permanent magnets, which we have in most of the new wind turbines that we install in Europe. The EU wants to remediate it. Good things are beginning to happen on that, but not fast enough.

All the debates about those corridors from different corners of the former Soviet Union in the past are reemerging now on electricity cables

Another crucial question is how you transmit and transport energy, whether it is in gaseous form or as electrons. This has been a huge issue with gas for many years. All the debates about those corridors from different corners of the former Soviet Union in the past are reemerging now on electricity cables. Morocco wants to build a cable to both the UK and Germany, but that project seems to be on hold. There are discussions about more cables coming from the East. The Chinese Electric Corporation would love to build high-voltage direct current (HVDC High Voltage Direct Current ) cables to the European Union. The geopolitics around the transport and transmission of energy, whether it is molecules or electrons, is huge. The transportation of energy is a big issue internally in Europe to deliver the transition. We do not have the electricity grids today to transition to a fully renewable electricity system nor a predominantly electrified energy system.

Are EU policies adapted to tackle these issues?

The EU Grid Package of the Commission is trying to tackle these issues. To deliver the transition, we need investment on a scale that we have never seen before. The finance is there. The debt and equity investors are already willing to invest in the necessary conversion of production, transport, transmission and consumption, including in the energy industry. But the incentives and business models are not there yet. Policymakers need to fully understand how to put the right incentives in place.