A just energy transition requires practicality and pragmatism

As temperatures globally continue to rise and global CO2 emissions reach a record high of 36.8 billion tons in 2022, the window of opportunity to address the threat of climate change is rapidly closing. At the same time, energy security and affordability are more important than ever.

Global energy consumption is expected to increase by 25 per cent by 2030, and 50 per cent by 2050. Meeting this demand sustainably will be a huge challenge. Even today, nearly 10 per cent of the world’s population (about 775 million people) lack access to the most basic form of electricity.

Recognising that energy is not just a commodity, but the foundation for social development, economic growth and prosperity, is the key to solving the energy trilemma. To this end, we must focus on energy resilience, and avoid dependencies on one or a small number of fuels, technologies or countries for our energy supply. The world must also face the inevitable truth that fossil fuels will continue to play an important role for the foreseeable future.

With roughly one-sixth of the world's power generation based on our technologies and a footprint that spans the conventional, renewable, and alternative energy sectors, Siemens Energy is uniquely positioned to help accelerate global decarbonisation. Here are four principles that we believe are critical to driving a just energy transition:

1. Leveraging natural gas as a crucial fuel

In 2021, the share of renewable energy increased worldwide by 8% and now accounts for almost one-third of annual global electricity consumption3. China, India, the U.S. and the EU are all making progress to significantly expand clean generating capacity. But the development of an energy system dominated by renewables cannot and will not happen overnight.

Natural gas still supplies around 25 per cent of the world's electricity and will continue to play a central role in decarbonising energy systems, particularly in the near term. Gas-fired and combined-cycle power plant can serve as a reliable and cost-effective complement to renewables. Peaker plants, for example, can be dispatched to ensure reliability of supply and compensate for the intermittency of sources like wind and solar.

Overall, the transition away from coal and oil to natural gas represents a “low hanging” fruit that can lead to substantial emissions reductions over the next five to ten years.

2. Embracing hydrogen and derivative e-Fuels

Hydrogen and other green fuels will be needed to achieve deep decarbonisation of energy systems, especially in industries and sectors that are “hard to abate”. According to the International Renewable Energy Agency (IRENA), hydrogen and its derivatives could represent as much as 12 per cent of final energy consumption by 20504. Realising its full potential as a clean energy carrier, however, will require adaptations to existing technologies.

Today, all of Siemens Energy’s gas turbines can burn fuel streams with high contents of hydrogen. Our plan is for all types to be compatible with 100 per cent hydrogen soon.

Meanwhile, we have taken steps to avoid obsolescence by making sure that new unit installation can be upgraded to run on 100 per cent hydrogen in the future, while markets and infrastructure get ready to support its use as an energy source. This will ultimately enable thousands of gas turbines currently in operation to be converted into powerful decarbonisers.

3. Modernising existing infrastructure

Enhancing the energy efficiency of existing assets through modernisation is one of the fastest ways to incrementally reduce carbon emissions.

As the Executive Vice President of Siemens Energy’s Gas Services business, I have seen first-hand just how impactful power plant modernisations can be in terms of improving sustainability. Some examples include the use of digital monitoring systems to optimise fuel consumption, converting from simple- to combined-cycle plants, and the implementation of carbon capture systems.

These upgrades (and others) allow customers to economically decarbonise, while protecting the investment they’ve made in existing infrastructure.

4. Decarbonising heat

District heating and heat used in buildings and to support industrial processes account for over half of global CO2 emissions. Industrial heat alone makes up nearly one-fifth of global energy consumption.

Decarbonising heat will be crucial to achieving established climate targets. At Siemens Energy, “Decarbonised Heat and Industrial Processes” is a field of action to which we are dedicating resources. Specific areas where we are focusing our efforts are in heat electrification using large-scale industrial heat pumps, along with combined heat and power (CHP) plants fired by low-carbon or zero-emission fuels. Both result in the generation of highly sustainable thermal energy for district heating or the production of process steam.

A socio-economic project

When it comes to mitigating the threats of climate change, we have reached the point of “now or never”. The world can no longer wait to take decisive action to decarbonise. But these efforts cannot occur in a vacuum. We must also consider the social and economic impacts of our decisions and be pragmatic when determining the best path forward. Ultimately, the energy transition is an overall socio-economic project that requires sustainability interests to be balanced with both energy security and affordability.