Provisional data for 2022 indicate a 32% drop in climate emissions has already been achieved by the EU, while a record annual reduction is foreseen for 2023.
Liese, a leading conservative candidate for North Rhine-Westphalia in the upcoming European Parliamentary elections this June, said the current economic slowdown was a key challenge to the transition.
“If anyone says this [Fit-for-55] isn’t enough, they haven’t understood how challenging it is,” Liese said.
The EC’s recent proposals to cut emissions by 90% by 2040 assume fulfillment of the Fit-for-55 legislation. The 2040 target will need to endorsed by a new commission before going before the European Council and Parliament. The current commission’s term of office runs to Oct. 31, 2024.
Analysts at S&P Global Commodity Insights forecast EU emissions will decline by 42% to 2030, and by 82% to 2040.
Uncompetitive energy costs were a key driver for Europe’s economic slowdown, Liese said. Also noting energy security concerns, the MEP called for an open debate on nuclear in Germany to explore a potential re-opening of two or three shuttered reactors or even new construction.
Without a shift in policy even the agreed 2030 coal exit in his home state of North Rhine-Westphalia was at risk, Liese said.
“We shouldn’t completely block the way for new nuclear, but clear priority should be the expansion of renewables,” the MEP said.
Europe’s emissions trading system was a key instrument to maximize CO2 reductions at lowest cost, but there was growing opposition in Germany to plans to add transport and heating as compliance sectors, he said.
Platts, a unit of S&P Global Commodity Insights, assessed EU carbon allowances (nearest December) at Eur53.44/mt on Feb. 19, down 6.5% day on day to its lowest level in 28 months.
German generation strategy
Meanwhile, Germany’s secretary of state at the energy ministry Stefan Wenzel said the Berlin government was working on the details of a power plant strategy with a decision on a proposed capacity market from 2028 due this summer.
The coalition plans four tenders of 2.5 GW each for hydrogen-ready gas-fired power station capacity, allowing for early coal and lignite plant closures.
Wenzel noted some progress on global CO2 markets citing the UAE’s early stage moves to set up carbon trading as an example.
The EU’s Carbon Border Adjustment Mechanism or CBAM would help to shield Europe during the green transition, but industry needed to be aware of external competition, Wenzel said.
“We may see green steel from India or China faster than expected. We need to be prepared,” he said.
Despite ambitious domestic targets, Germany would still need to import two thirds of its future hydrogen demand, Wenzel said, noting the government was continuing to build out its hydrogen strategy, his ministry recently confirming availability of the next Eur3.5 billion tranche of support for the H2Global import scheme.
Import talks are underway with Denmark, Norway and Spain, while Germany also targets North Africa for supplies to be shipped mainly in the form of ammonia.
Germany’s steel sector will be a key offtaker of clean hydrogen with steel association Wirtschaftsvereinigung Stahl (WV Stahl) estimating some 600,000 mt/year to 850,000 mt/year of demand by 2030.
“The new direct reduction steel plants also offer some flexibility during the ramp up and can switch first from coal to use natural gas before the switch to clean hydrogen,” WV Stahl CEO Kerstin Maria Rippel told the conference.
First projects target a 2025 or 2026 start date.
S&P Global Commodity Insights analysts see 2030 EU green hydrogen production of around 3.2 million mt under its European Planning Case.
Europe is among the most expensive global regions for electrolytic hydrogen production, according to the Platts Hydrogen Price Wall.
