Electrification and ETS plans: twin approaches for industry

It is no coincidence that a review of the EU’s emissions trading system (ETS) and an electrification action plan are released together.

Both are aimed to drive forward decarbonisation at the industrial level – a diverse collection of sectors including industry itself, buildings and transport and each also diverse and with multiple individual challenges.

Specifically the electrification action plan is slated to make Europe the first electro-powered continent, with the ETS playing a supportive role with a stronger carbon market and with both looking forward to the next decade of actions to reach the 90% 2040 carbon reduction target.

(Note the ETS covers just the hard to abate sectors, i.e. heavy industry, power generation and the commercial maritime and aviation sectors. A separate scheme, ETS2 for buildings, road transport and small industry was created in the 2023 revision of the ETS directive, which is due to become fully operational in 2028 with assessment of the feasibility of integrating these sectors into the EU ETS due by 2031.)

Both of these plans have been covered in detail on this site. In essence the electrification plan envisages an approximate doubling in electrification to 46% by 2040, this to be assessed as part of the post-2030 package, while the ETS reform envisages inter alia boosting clean energy investment in the industrial sectors.

Boost competitiveness

Other underlying aims are to boost European competitiveness with improved security with home grown energy supply and at lower prices.

Both of these have been widely welcomed by players in the energy sector. They present a comprehensive approach to strengthen investment in the sector and to further encourage citizens and businesses to become participants in the clean energy transition.

However, they are only a starting point and there is much to do for progress to be made. The European Commission has set itself 15 specific action points in the electrification plan, while the revised ETS directive must proceed through the EU parliamentary legislative process.

Individual sectors, such as energy storage and waste-to-energy, have indicated that they require specific actions for their advancement.

But ultimately it will be primarily the actions at member state level, where the detail can be fine-tuned, that will ensure that the ambitions of the plans are turned into actions. The intention to create an electrification action plan alliance to bring together stakeholders across the sector is therefore a welcome step, with its potential to foster cross-state communication and knowledge sharing.

Another key detail to realising the plan is monitoring of progress and this doesn’t appear to be explicitly mentioned and could be a role for the action plan alliance to undertake.

Last but not least, the large number of EU supported projects should be noted that are under way – many featured in the Enlit project zone – that are developing the solutions that can deliver greater levels of industry electrification.