This study addresses the essential role of the industry sector for the EU’s carbon neutrality objectives, exploring possible pathways for a large-scale replacement of fossil fuels by secondary energy carriers within industry processes. Two main scenarios are examined, relying respectively on electricity and hydrogen as main vectors of the transition, in an approach that combines a detailed scenarization of industry demand with the FORECAST simulation tool and a joint optimization of European energy resource capacities and hourly dispatch for the year 2050 using the METIS energy system model. This analysis therefore provides insights on both industry specific potentials and limitations for transition and the related energy system effects, with sensitivities on the existence of global value chains for chemical imports and on the availability of wind and solar power generation. In particular, evidence from both scenarios suggest a massive increase of the demand for green hydrogen and electricity, driving significant infrastructure adaptation at European level. While domestic hydrogen generation from renewable energy sources becomes competitive compared to imports, its significance within industry needs is highly dependent on the imported volumes of strategic chemicals such as green methanol, ammonia or ethylene.

In early 2022, the Pentalateral Energy Forum has selected Artelys to establish building blocks for the construction of a joint vision for a decarbonised Penta electricity system. The project outputs will serve as inputs for the actual vision building process among Penta members in 2023. The Pentalateral Energy Forum is the framework for regional cooperation in Central Western Europe towards improved electricity market integration and security of supply, including Austria, Belgium, France, Germany, Luxemburg, the Netherlands and Switzerland. For this purpose, Artelys analysed and compared a large number of national and international scenario studies and technical reports. The identification of likely developments common to the different transition pathways, but also remaining uncertainties, allowed to derive a set of recommendations for power sector decarbonisation in the Penta region. It highlights that electricity will play the central means of decarbonisation of all economic sectors and should hence be decarbonised in itself as quickly as possible, ideally towards 2035. The countries in the Pentalateral Energy Forum are particularly well placed to initiate or accelerate the required changes. Regional cooperation between countries will enable decarbonisation in the cheapest way – but requires dedicated infrastructure investments.