Decarbonization pathways for Europe through 2050: ENGIE's scenario

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Europe has already begun its transition with a 2% annual reduction of its emissions between 2010 and 2020. But to meet its climate commitments, it must double its efforts to achieve a reduction of 4% yearly by 2050. The decarbonization of the electrical system is underpinned by already mature technologies such as solar, wind and electric vehicles, hence we can consider the 2030 goals to be within our grasp. However, Europe’s 2050 ambitions are at risk: 70% of the technologies required to achieve its stated targets have not yet reached sufficient maturity.  
As a pioneer of the energy transition, Europe must now step up its efforts to ensure its energy sovereignty and strengthen its competitiveness. At a time when the Draghi and Letta reports single out energy as a factor undermining the competitiveness of the European economy, it is more necessary than ever to think about how to optimize the costs of the energy transition.  

The purpose of this scenario is precisely to propose the optimal pathway to meet the European Net Zero Carbon by 2050 goal, while guaranteeing a reliable and affordable energy transition. 

Catherine MacGregor, CEO of ENGIE: 
“We must pursue an in-depth transformation of our entire energy system: from production to consumption, from the electron to the molecule, by way of heating and cooling, with flexibility and infrastructures playing a major role. As a committed player in the energy transition, ENGIE will fully play its part in this collective effort.” 

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All decarbonization levers will be necessary to achieve the energy transition at the lowest cost

Our key indicators for reaching Net Zero in Europe in 2050.

• -30% reduction in final energy demand, which is decoupling from economic growth (GDP: +1.3% per year)
• A 65% decrease in energy dependency (fossil fuels and molecules imports)
• Electrification of uses and a 5.5-fold increase in renewable capacity (solar and wind)
• A 4.5-fold increase in flexibility capacity, (3/4 of which will be supply side)
• - 45% reduction in methane demand, which will be fully decarbonized
• A 7-fold increase in hydrogen demand (100% low carbon by 2050), driven by new uses such as aviation, maritime and heavy industries. 

Facing the risks, ENGIE's call to action

The energy transition requires the transformation of the entire energy system, from supply to demand, from electrons to molecules, by way of heating and cooling, with flexibility and infrastructures playing a major role.

Yet the various technologies underway to decarbonize the energy system of tomorrow are not all at the same level of maturity.
Europe’s 2030 Fit for 55 goal is within our reach as it is largely underpinned by mature technologies (solar, wind, electric vehicles…).
Yet its 2050 Net Zero carbon goal is much more at risk. Indeed 70% of required technologies such as the decarbonization of air and sea transport, or heavy industry, are not yet sufficiently developed to be scaled up by 2050.

These enablers still require a significant reduction in industrial, financial and regulatory risk factors. 

The cost of the transition 

The decarbonization of Europe requires significant investment in all levers of the energy transition: new production capacities and decarbonized energy infrastructures, retrofitting of buildings and heating solutions, fleets of decarbonized vehicles along with adequate charging infrastructure, change in industrial processes. Yet such expenditure should be gradually offset by the savings made on fossil fuels.

Taking these savings into account, ENGIE has evaluated the extra expenditure required to decarbonize the European economy by 2030 at 1.8% of GDP (net value). This amount should decrease over subsequent decades: 1.5% of GDP between 2031 and 2040 and 0.9% of GDP between 2041 and 2050.  
The cost of decarbonization is considerable, yet within the reach of our economies.  
It is also worth weighing up the cost and challenges of inaction estimated at around 10% of GDP per degree of additional global warming^[i]. 

Deviating from this core scenario would increase both the risks and the cost of energy transition.  

_{^{[i] https://www.nber.org/system/files/working_papers/w32450/w32450.pdf}} / _{^{https://www.nature.com/articles/s41586-024-07219-0}} 

A pragmatic approach

Our new Decarbonization Pathways for Europe through 2050 scenario adopts the same pragmatic approach with the goal of reaching Europe’s net zero carbon goals by 2050 while minimizing the costs for the wider community and maximizing the safety of the energy system.

The method is based on the modeling of the interconnected energy systems of 15 European countries (1) representing over 85% of Europe’s total energy consumption. It considers the latest developments in the European energy market and the risks relative, among other things, to the delay in rolling out green gas and the rise of generative AI which is extremely energy hungry. 

^{(1) Austria, Belgium, Czech Republic, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Slovakia, Spain, Switzerland, United Kingdom}

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