Energy Transition Opportunities and Risks – Articles – GMK Center

The “green” energy transition will require more than two billion tons of steel and business interaction with the state

The transformation of “green” energy is a global trend in climate and economic policy, which necessitates the need for a radical restructuring of entire industries. The role of metallurgy in this process is very important, because the main solutions to achieving carbon neutrality in energy, construction, transportation and engineering depend on the use of steel. According to GMK, the implementation of global “green” energy transformation plans in various industries by 2050 will require at least two billion tons of steel. Experts discussed at the roundtable “Green Energy Transmission Properties and the Role of Mineralogy,” organized by the GMK Center.

“Thanks to the transition to green energy, the existing sectors of the economy will change their appearance. The construction, transportation, energy and industry sectors will have to be completely restructured, which will change the structure of the economy. This is impossible without metallurgy as a steel producer. For a “green” transition, you need “green” steel In other words, mineralogy needs decarbonization, but decarbonization of other industries also depends on mineralogy,” the director of the GMK Center said during the roundtable. Stanislav Zinchenko.

He added that for the “green” energy transition, the consistency of state policy is very important, because the implementation of environmental goals is always the result of interaction between the state and the business sector.

Director of the Center for Economic Innovation and Adviser to the Prime Minister Kirill Kryvolab He said that at the level of the Ministry of Energy there are at least three projects related to the “green” transition. FirstlyKPMG, a consulting firm, is working on the development of the National Energy Strategy. It is assumed that by the end of the year, decisions about market models, incentives and credits will be known, and forecasts for electricity production and consumption will be formed. SecondlyRoland Berger, a consulting firm, is drafting a national hydrogen strategy. third project It concerns an update of the renewable energy development plan, which is being written by an industry association.

Kirill Krivolab explained: “Many projects are moving towards convergence at some point, laying the foundation for a national ‘green’ energy transition strategy..

He noted that Ukraine’s energy strategy approach is heavily biased towards energy independence. The reasons are obvious – the refusal of Russian gas. This approach includes the emergence of new sources of energy as well as the widespread replacement of this gas: the development of energy production from biomass, the development of renewable energy, the emergence of entire economic sectors aimed at a “green” transformation.

“green energy

To reduce carbon dioxide emissions2 All industries need green electricity. The International Energy Agency expects a 2.7-fold increase in electricity generation by 2050. By that time, nearly 90% of electricity will be generated from renewable sources, which will create additional demand for steel to build renewable energy facilities.

According to GMK Center estimates, the global energy sector will need 1.7 billion tons of steel to go green. This is comparable to the current annual volumes of steel production in the world.

“The development of almost all areas of renewable energy and distribution networks depends on the use of steel,” said an analyst at the GMK Center. Andrey Glushenko.

He explained that steel is used in the production of photovoltaic panels, pumps, tanks and heat exchangers in solar power plants, to manufacture power transmission poles in distribution and supply systems. Steel is also an essential material in renewable energy, where it is used, for example, in the manufacture of wind turbine masts. According to GMK Center estimates, in 2021-2050. Solar energy will need 566 million tons of steel, and wind energy – 1129 million tons.

Now the share of “green” generation in the total energy mix reaches 8%, if we talk exclusively about the sun and wind. If we add the hydropower component, the share of renewable energy will be 12%, – note Natalia Slobodian, Head of Climate Change and Environment Division at DTEK. “Ukraine’s energy strategy provides a more ambitious long-term goal: by 2035 green energy should account for 25% of primary energy consumption.”.

According to Natalia Slobodyan, building new renewable energy facilities is impossible without investments in this industry.

She pointed out that “attracting investments, in turn, depends on creating transparent and clear regulatory conditions similar to all the rules of the game, and fulfilling the state’s obligations towards investors.”.

And agrees with her opinion Chairman of the Board of Directors of the Ukrainian Wind Energy Association. Andrei Konchenkov.

“The government’s position, as recorded in the second Nationally Determined Contribution to the Paris Climate Agreement, is that CO2 emissions2 It is only supposed to be reduced by reducing the use of charcoal. The development of alternative “green” energy is a very complex topic. When we have a dialogue between market players and the government, green energy will develop faster,” Andrey Konchenkov sure.

Hydrogen “green”

Although Ukraine has declared its desire to occupy a “green” hydrogen-producing niche for the European market, the implementation of these plans is still in question. As Andrei Konchenkov pointed out, to produce “green” hydrogen, “green” electricity is needed, and very little is still produced.

“Hydrogen produced using atomic energy, which Ukraine can produce – conditionally “yellow” – Europe does not need. France, which also has a significant amount of nuclear energy, is quite capable of producing it there. Therefore, they are ready to receive from us only green hydrogen ” which will be produced using renewable energy sources.

The second problem that may hinder the implementation of plans to supply Europe with new fuels is the lack of appropriate distribution channels. As explained by the Director of Integrated Communications at NJSC Naftogaz Maxim Belavskythe transportation of gas-hydrogen-hydrogen mixtures through the Ukrainian gas transportation system is practically impossible from the point of view of hydraulics.

There will be a loss of resources by the method of pumping and other phenomena associated, for example, with gas extraction. The movement pattern of the gas-hydrogen mixture will be affected by the gas distribution network assemblies and the gas outlets connected to the main gas pipeline system. Then we have to compensate for the pressure loss in the gas pipeline branch with the corresponding injection pressure of the hydrogen itself. He explained that these are very complex calculations that need continuous improvement..

According to the calculations of Naftogaz, pipelines for transporting gas-hydrogen and hydrogen mixtures can be used only if the consumer’s access to the gas transport system is limited, and the length of the pipeline itself does not exceed 50-70 km.

But, most likely, in the near future, hydrogen may not be needed as a fuel.

“Hydrogen and CO2 capture technologies, which are now actively discussed in our space and which we often associate with energy conversion, are just components of global corporate strategy, along with other measures. According to our observations, hydrogen is seen in situations where electrification is impossible. Or when It is not possible to reduce emissions in other ways. That is, when other measures do not work.” Oksana RomanAnd the Head of Energy Conversion in Central and Eastern Europe at Bilfinger Tebodin.

“Green” construction

The GMK study says that construction and real estate are the world’s two main sources of greenhouse gas emissions. It accounts for 38% of global emissions, with 10% (3.5 billion tons of carbon dioxide2). Another 28% of emissions (10 billion tons of CO2)2) are formed during the operation of buildings (operational emissions) as a result of energy consumption for heating, air conditioning, lighting, etc. In the coming years, significant efforts and investments to reduce emissions will be directed in this direction. The International Energy Agency expects emissions from the construction sector to fall by 50% by 2030 to meet its carbon neutrality targets. By 2050, operational emissions should be reduced to zero.

“It is possible to reduce emissions in construction and real estate by rebuilding and extending the life of existing buildings, using lower-emissions produced materials, using materials suitable for post-processing, and improving energy efficiency in buildings,” explained GMK’s senior analyst. Andrey Tarasenko.

He said the ZEB (Zero Energy Building) concept is gaining popularity recently. These are buildings that generate the same amount of energy they consume, or even more. The concept provides for the implementation of a number of energy efficiency solutions along with renewable energy facilities. Moreover, these solutions rely on the use of steel to install solar panels, steel window systems, power piles, insulating panels, etc.

The bulk of operational emissions from buildings are indirect emissions. Therefore, on the topic of developing energy efficiency of buildings, there is an alternative – the development of renewable energy. In other words, if the energy used by buildings during operation was “green,” the buildings’ indirect emissions would be zero.

“Investing in energy-efficient buildings and creating ‘carbon-neutral buildings’ delivers high returns on the aggregate level, well above the return on renewable energy: $1 million investment in energy-efficient buildings creates 15 jobs, $1 million investment in renewable energy only 2″ said Andrei Tarasenko. -3 functions.

“Green” projects

In the post-Soviet space, the main problem of environmental projects lies in the insufficient level of their development. According to experts, this is why it is difficult to find financing for such projects.

“There are much less opportunities in Ukraine and in the post-Soviet space than, for example, in North-West Europe. But here, too, a number of organizations are already confirming their interest in financing these projects. At the same time, they emphasize that the issue of financing is not A question of financing. This is a question of project maturity and readiness. Unfortunately, the projects we observe in the post-Soviet space look exactly like presentations on paper without relevant data, without models,” said Oksana Roman.

I agree with her and Marina DenisyukProject Director of the Cabinet Office of Reforms of Ukraine.

“The issue of finance is considered at the highest level. We recently had a focused dialogue with the European Union, the main issue being the formation of a platform for financial instruments. Decides how Ukraine and the European Union can participate in projects to decarbonize the economy. Unfortunately, this mechanism will not work without high-quality projects. “Project design and development is the only way to get funding,” says Marina Denisyuk..

Oksana Roman noted other difficulties in obtaining financing for energy conversion projects. Among them: technological and economic uncertainty associated with innovative technologies, a long planning horizon, the need to involve various partners and a whole range of financing parties in the project, which creates difficulties in coordinating between them. The terms of delivery of equipment are also of great importance – they can be up to 18 months.

Oksana urged Roman, “But let’s be optimistic.”.

It remains only to agree with her.

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