Three Key Takeaways from the Lux Forum Paris

The EU emits 4.0 gigatonne of CO₂ annually. In 2021, the EU unveiled the Fit for 55 package, which is a legal obligation for the bloc to reduce its emissions by at least 55% by 2030 to reach carbon neutrality by 2050. In April 2023, Lux Research hosted a forum in Paris titled “Decarbonization: A Survival Guide to 2030,” which brought together key stakeholders across the energy and industrial sectors to understand how the momentum in decarbonization impacts their value chain. Below are the key takeaways from the event:

1. Decarbonization is often synonymous with electrification. The European economy is powered by combustion of fossil fuels — while there are many avenues for decarbonization, direct use of renewable electricity is the most straightforward. Every sector — whether mobility, industry, or residential — is exploring electrification of its operations. Today, 21% of the EU’s energy mix is electricity; this is set to grow to 35% by 2030 given the pace of electric vehicle and heat pump adoption, among other pivots. Such a rapid expansion brings special considerations, such as spatial planning issues, transmission infrastructure expansion, and dealing with simultaneous demand. To mitigate these issues, investment in local energy storage and energy trading tools is essential.
2. For chemicals companies, it’s not decarbonization but defossilization. In a net-zero world, the chemicals sector still needs a source of carbon to produce commodity and specialty chemicals. Recycling, biomass, and carbon capture and utilization (CCU) will be the future sources of carbon — the question is, how much carbon will be realizable from each source? Recycling and biomass are considered the most cost efficient, but availability is constrained; CCU can offer a practically limitless source of carbon but at a highly prohibitive cost. Securing the EU’s future source of carbon will therefore be a fine balancing act between economic feasibility and practicality.
3. The passage of REPowerEU in 2022 raised the EU’s requirement for low-carbon hydrogen to up to 20 million tonne by 2030, of which half will be imported. Several technologies are available to transport hydrogen, but international imports will be led by the use of ammonia carrier due to its cost advantage and existing infrastructure. The missing link in an ammonia economy is ammonia cracking — the technology is still at an early stage of development, and technology providers are few. It is therefore a race for the EU to secure ammonia cracking projects, as Japan and Korea also are vying for the same providers.