Luxembourg

This report is an output of the Clean Energy Technology Observatory (CETO). CETO's objective is to provide an evidence-based analysis feeding the policy making process and hence increasing the effectiveness of R&I policies for clean energy technologies and solutions. It monitors EU research and innovation activities on clean energy technologies needed for the delivery of the European Green Deal; and assesses the competitiveness of the EU clean energy sector and its positioning in the global energy market. CETO is being implemented by the Joint Research Centre for DG Research and Innovation in coordination with DG Energy.

In 2021 the global electricity and heat sector recorded the highest increase in carbon dioxide (CO2) emissions in comparison with the previous year highlighting the ongoing challenges in reducing emissions within the sector. Therefore combined heat and power (CHP) plants running on renewable fuels can play an important role in the energy transition by decarbonising a process increasing the efficiency and capacity factor. Since 2003 Luxembourgish CHP plants have been transitioning from natural gas to biomass mainly wood pellets. However even though wood pellets are a renewable alternative the market volatility in 2022 highlighted the vulnerability of a system reliant solely on one type of fuel. This study assesses the feasibility of using hydrogen to decarbonise a cogeneration plant powered by a natural gas-fuelled internal combustion engine. Although the technology to use hydrogen as a fuel for such systems already exists a technical and economic analysis of implementing a hydrogen-ready plant is still lacking. Our results show that from a technical perspective retrofitting an existing power plant to operate with hydrogen is feasible either by adapting or replacing the engine to accommodate hydrogen blends from 0 up to 100%. The costs of making the CHP plant hydrogen-ready vary depending on the scenario ranging from a 20% increase for retrofitting to a 60% increase for engine replacement in the best-case scenarios. However these values remain highly variable due to uncertainties associated with the ongoing technology development. From an economic standpoint as of 2024 running the plant on hydrogen remains more expensive due to significant initial investments and higher fuel costs. Nevertheless projections indicate that rising climate concerns CO2 taxes geopolitical factors and the development of the hydrogen framework in the region—through projects such as MosaHYc and HY4Link— could accelerate the competitiveness of hydrogen making it a more viable alternative to fossil-based solutions in the near future.

The Green Deal Industrial Plan aims to boost the competitiveness of Europe’s net-zero industry and to accelerate the transition to climate neutrality. The Plan is based on four pillars: (1) a predictable and simplified regulatory environment; (2) faster access to funding; (3) developing skills for net-zero industry; and (4) open trade for resilient supply chains.

The European Commission published its hydrogen strategy for a climate-neutral Europe on the 8th July 2020. This strategy brings different strands of policy action together covering the entire value chain as well as the industrial market and infrastructure angles together with the research and innovation perspective and the international dimension in order to create an enabling environment to scale up hydrogen supply and demand for a climate-neutral economy. The strategy also highlights clean hydrogen and its value chain as one of the essential areas to unlock investment to foster sustainable growth and jobs which will be critical in the context of recovery from the COVID-19 crisis. It sets strategic objectives to install at least 6 GW of renewable hydrogen electrolysers by 2024 and at least 40 GW of renewable hydrogen electrolysers by 2030 and foresees industrial applications and mobility as the two main lead markets. This report provides the evidence base established on the latest publicly available data for identifying investment opportunities in the hydrogen value chain over the period from 2020 to 2050 and the associated benefits in terms of jobs. Considering the dynamics and significant scale-up expected over a very short period of time multiple sources have been used to estimate the different values consistently and transparently. The report covers the full value chain from the production of renewable electricity as the energy source for renewable hydrogen production to the investment needs in industrial applications and hydrogen trucks and buses. Although the values range significantly across the different sources the overall trend is clear. Driving hydrogen development past the tipping point needs critical mass in investment an enabling regulatory framework new lead markets sustained research and innovation into breakthrough technologies and for bringing new solutions to the market a large-scale infrastructure network that only the EU and the single market can offer and cooperation with our third country partners. All actors public and private at European national and regional level must work together across the entire value chain to build a dynamic hydrogen ecosystem in Europe.

This report analyses five case study reports in-depth across five EU countries as part of a broader analytical and critical exercise. This analytical work seeks to contribute to the development of new models for regional and local authorities aiming to boost support for Green Transition of their economies through smarter innovation policies using the smart specialisation (S3) approach. The work covered five regions from across the European Union representing a diversity of approaches to using S3 for Green Transition: the Basque Country in Spain the Centro region in Portugal the region of East and North Finland the region of Western Macedonia in Greece and the region of West Netherlands. The case studies included in this report consists of three sections on (i) Profile of the region and key development challenges; (ii) Innovation strategies and policies for green transition: incorporating societal challenges; (iii) Understanding and monitoring innovationled green transition. Drawing together the different elements presented the conclusion provides a summary overview of the case and the authors’ opinion on it.

This report investigates the status and trend of Renewable Fuels of Non-Biological Origin (RFNBO) except hydrogen which are needed to cover part of the EU’s demand for low carbon renewable fuels in the coming years. The report is an update of the CETO 2023 report. Most of the conversion technologies investigated have been already demonstrated at small-scale and the current EU legislative framework under the recast of the Renewable Energy Directive (EU) 2018/2001 (Directive EU 2023/2413) sets specific targets for their use. As a pre-requisite well-established solid hydrogen supply chains are needed together with carbon capture technologies to provide carbon dioxide as Carbon Capture and Use (CCU). Fuels that may be produced starting from H2 and CO2 or N2 are hydrocarbons alcohols and ammonia. RFNBO may play a crucial role in the energytransition towards decarbonisation especially in hard-to-abate sectors where direct electrification is not possible. In addition most RFNBO can use existing infrastructure. The growing interest in these fuels is witnessed by the many funding programmes which are today available. Moreover EU leads the sector in terms of patents companies and demonstration activities. Finally the report considers the major challenges and the opportunities for a rapid market uptake of such fuels.

The European Union is on a pathway to achieve climate neutrality by 2050. This report explores the historic and necessary efforts to align Europe′s electricity heating and transport systems with transformative EU benchmarks for 2030 to meet that longer-term goal. CO2 emissions have declined significantly in the EU electricity subsystem over the past few decades. This presents an important opportunity to decarbonise rapidly in the near future and to roll out electrification to other sectors while strengthening energy independence security and competitiveness for all EU countries. Through accelerated gains in energy and resource efficiency and the alignment of Member States′ efforts within a more coherent EU energy system the rapid electrification of buildings transport and industry can greatly reduce Europe′s reliance on foreign fossil fuels and unlock critical progress in heating and transport. Over the past five years EU policy frameworks for climate mitigation and energy system transformation have become far more coherent and complete. Infrastructure security and resilience have been bolstered through integrated climate and energy planning in tandem with national and cross-border efforts to ensure sound policy implementation. It is now critical that decision-makers translate objectives and priorities for the energy system transition into actionable measures. This includes crafting fiscal strategies to finance key upfront infrastructure investments; distributing the cost of capital proportionally to not overburden taxpayers; aligning taxation pricing and information signals across the whole energy system; and regularly monitoring and evaluating performance to recalibrate policies when needed.