A sneak peek to Deloitte’s Energy Transition Monitor

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A sneak peek to Deloitte’s Energy Transition Monitor

Three misconceptions about the energy transition

The energy transition is one of the most significant transformation the Netherlands has seen in this generation. The government has set clear targets for the country to play its part in reducing global greenhouse gas (GHG) emissions, and achieve net zero by 2050. So, more than half way through the transition, how is the Netherlands doing?

What’s your perspective? Perhaps you have your own opinions – maybe based on public information, social media, news headlines, or the views of colleagues and neighbors. The picture is not always clear, though. That’s why, on 6 September, Deloitte will publish the Energy Transition Monitor, a snapshot of where the Netherlands stands with regards to its energy transition. As a sneak peek into this publication, here are three common misconception about the energy transition.

Misconception #1: The energy transition is a quest to reduce emissions.

It’s true that the energy transition will be essential for reducing Dutch GHG emissions, and it is driven by climate change legislation. But simply reducing emissions is easy: just stop manufacturing, stop travelling, stop building, stop heating and powering our homes, schools, hospitals and workplaces.

While reducing energy consumption through behavioral change is definitely a lever to pull, another challenge is how to reduce emissions while also delivering the level of economic and societal security that Dutch people and businesses expect. How do we reduce emissions, but continue to service society’s wellbeing with comfortable homes, jobs, and the products we consume?

That’s why the whole energy system must undergo a transition, not a slowdown or halt. To achieve net zero emissions by 2050, we must rethink not only how we produce and supply energy, but also how we consume it. That will involve big changes in how industries process materials, how we heat our homes, and how vehicles are powered.

The energy transition should indeed reduce our emissions but – done right – it will achieve much more.
 

Misconception #2: Electricity is energy.

True, in part, but electricity is just one form of energy. Technically, electricity is an energy carrier because it doesn’t occur naturally – unless you live in a region prone to lightning! All the electricity we consume must be generated by processing a primary energy source, such as burning coal to produce the steam that turns a generator, or using photovoltaic panels to convert sunlight into electricity.

Electricity has a vital role in the energy transition, because it can be produced from many renewable sources, such as wind and sun, which produce no emissions. The good news is that the Netherlands has made great progress in transforming its electricity generation, and about 40% of the country’s electricity is now generated from renewable sources.

Not so good news is that electricity is only a small part of our energy use. It supplies just 23% of Dutch energy consumption, and that share has grown only slightly. The vast majority of energy continues to come from molecules, such as natural gas or oil products, which produce significant GHG emissions. Some industrial applications, for instance, require significant new technology and high investment to be able to move away from these high-emitting molecular energy sources.

Another important focus for the energy transition is therefore to meet such challenges by decarbonizing the molecular part of our energy system, by scaling up green hydrogen and making optimal use of our limited biomass resources, while still continuing to push for more electrification of our energy system.
 

Misconception #3: The Netherlands has a clear view of its emissions.

Recent years have seen the EU develop standards for measuring emissions, and the Dutch government has adopted those standards, which provide a consistent basis for measuring, monitoring and reporting emissions. In theory, such standards should give the country a clear view of its emissions: as long as they fall within their scope.

But are physical emissions – when fuel is being burned – properly attributed to the parties responsible for them? Well, maybe not. One example is the emissions produced by international shipping and aviation. Because most physical emissions occur in international waters or airspace, they fall outside national jurisdictions, so no national government is held accountable. Nonetheless, with many aircraft and ships travelling through and refueling in the Netherlands, we must acknowledge that they are associated with activities in the Netherlands, although they aren’t shown in the country’s official view of its emissions. Similarly, for emissions associated with the products we import and consume; not all responsibility can be with the producing party (or country), can it?

If the Dutch energy transition is to be effective in reducing global emissions, it should have a clear picture of all the emissions that can be attributed to the Netherlands, and take responsibility for them. The design and evaluation of policies aiming to reduce (national) emissions at least should take into account the effect they have on global emissions.
 

Even from these three examples, it’s clear that the Dutch energy transition is at a crossroads, and now faces some complex questions. Finding the right answers to those questions might be challenging, but they will affect not only the country’s emissions, but also its future economy and society.

Deloitte’s Energy Transition Monitor brings together a breadth of statistical and qualitative research, to provide a clear and consistent fact-base and assessment of the energy transition. Using that clear picture, experts and stakeholders can examine the issues and evidence, have well-informed conversations, and choose a way forward that will benefit the whole country.

Discover Deloitte's Energy Transition Monitor here

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