Efficient decarbonisation of the economy

Decarbonisation of the economy requires wide-scale electrification in the short term


Achieving carbon neutrality by 2050 means taking action in each and every sector. Efficient decarbonisation of the economy means achieving it at the lowest possible cost, using the most competitive alternatives in each end-use.

Decarbonization of the economy
The decarbonization of the economy requires massive electrification in the short term.

The current energy system is based on the use of fossil fuels, which are present in all end-uses and account for more than 60 % of energy demand in Europe. This model is very inefficient and polluting. With 8 % of world emissions, Europe is the third biggest polluter on the planet after China and the USA. This is why, for some time, the EU has been leading the fight against climate change, with targets and specific policies to reduce the CO2 content of the atmosphere. EU emissions have decreased by -28 % compared to 1990 levels, mainly due to developments in the electricity sector (-30 %).

Alternatives for descarbonisation of the economy 

The transition to a carbon-neutral economy by 2050 will require significant efforts across all sectors, as well as the use of all available technologies that are either emission-free or carbon-neutral. Namely:

 Direct electrification with 100 % renewable electricity: the generation of electricity from the wind or the sun makes it possible to decarbonise the electricity sector and, by using electric vehicles and heat pumps, the emissions from other end-uses such as transport, heating and cooling can be eliminated.

 Indirect electrification or green hydrogen from 100 % renewable sources (green H2): clean hydrogen (green hydrogen or green H2) can be produced from renewable electricity, thus yielding carbon-neutral fuels in the form of gas (clean synthetic methane) or liquid (kerosene, gasoline or synthetic diesel).

 Biofuels: they are produced from organic material in emission-free processes and can be used in a wide range of end-uses.

Although green hydrogen (green H2) is still too costly and biofuels are limited by the scarcity of organic resources, renewable electrical energies are already competitive, their cost is expected to continue to fall, possibly by a further 40 % by 2030, and their widespread use represents an increase in efficiency over other alternatives.

In the short and medium term, electricity based on renewable energy will remain the most realistic alternative for mass decarbonisation of the economy and could allow for a theoretical decarbonisation of 92 % of final energy demand in Europe. It will do this by replacing fossil fuels in the electricity sector with renewable sources and electrifying wheeled transport, household heating and low and medium temperature industry.

European Union sectors that can be descarbonised through direct electrification 

efficient decarbonisation

The other niche sectors that are difficult to electrify (shipping, aviation and high-temperature industries) represent less than 15 % of EU consumption and emissions.

Uses that are difficult to electrify in the European Union 

green hydrogen
Green hydrogen is the key to decarbonising the 8 % of EU demand that is hard to electrify.

Efficient decarbonisation requires the decarbonisation of the electricity sector by employing renewable energy and large-scale electrification in the short term, leaving the consumption niches for later since they depend on more expensive and immature technologies.

Iberdrola was a pioneer in its determined commitment to renewable energy, anticipating the current energy transition in 20 years, and today more than 60 % of its generation capacity is renewable, making it a world leader in wind energy. With its Smart solutions it is contributing to the deployment of electric vehicles by developing and marketing private and public charge services. It is also developing electric heat pumps, offering alternatives for heating and cooling tailored to our customers' needs. It is also worth highlighting the major R&D project that Iberdrola is developing in Puertollano focused on producing H2 from sources that are 100 % renewable (green H2) with the aim being to decarbonise and bring down the cost of this industrial product of which it expects to produce 85,000 tonnes by 2030.

 The decarbonisation of energy in Europe