All Direct and Indirect Electric Society

tec.news: Industry is one of the key sectors of the AES. What relevance do electrification and networking have for industry and Germany as a business location?

Holger Lösch: In the course of decarbonisation, electrification is a strategy for many companies - and therefore both an opportunity and a challenge. But we will also need an incremental, molecular turnaround. Perhaps it would be better to speak of an "All Direct and Indirect Electric Society" - and we should also not ignore the option of carbon management. I am generally hoping for a rapidly expanding range of options for CO-2 reduction. There is no doubt that there will be a significantly higher degree of electrification and this will be the method of choice in many applications. However, we must succeed in ensuring the availability, stability and ultimately the economic viability of both the electrons and the molecules if we are to remain globally competitive.

tec.news: What does electrification mean for industry?

Holger Lösch: It is always about enabling our industry to continue to develop to a climate-neutral future, while at the same time opening up opportunities for German and European industries to develop and conquer new technologies and markets. 

Direct electrification of the entire industry is not technologically and economically possible everywhere and immediately. Where it can be put to expedient use, it delivers rapid progress in innovation and efficiency gains. I see great opportunities for industry developing these technologies in the international competition for the best and most efficient transformation technologies.

We will see the biggest boost to electrification in mobility. The defining technology path here is the electrification of rail and road: HGVs will also increasingly drive electrically in the future, we will have an ever expanding share of electric vehicles and we will continue to electrify the rail networks. In addition, the focus is on hydrogen - with the question that still remains unanswered for me: "What role will synthetic fuels play?".

From a climate perspective, it would be more efficient to quickly make the huge number of combustion engines climate-neutral by way of CO2-reduced or carbon-neutral fuels in parallel with the electric ramp-up. But that is a political debate. In addition to energy efficiency, electrification is the method of choice for buildings in many areas. In this context, the heat pump will be a central element in the decarbonisation of heating requirements, but not the only one. It is foreseeable that green gases will still play a role in parts of the heating supply in 2045, albeit not a dominant one. But there will certainly be areas in which molecules are indispensable.

tec.news: How can system efficiency be achieved? Do you have any perspectives on the infrastructure sector at this point?

Holger Lösch: I don't believe in making predictions about what our system will look like in 2050. Because for me that's a contradiction: on the one hand, we are talking about the greatest challenge that humanity has ever faced and emphasising the most comprehensive transformation that we have to implement. On the other hand, we are massively narrowing the technology paths – which is a total contradiction for me. If it is the greatest challenge, then I have to mobilise everything - innovation and investment. And I must not impose any bans on innovation or the future. That's what bothers me about the current debate. If we do not succeed in achieving the transformation on a competitive path, we will fail politically, economically, socially and ecologically. We need the most intelligent mix of technologies and investment incentives to achieve our goals – which we have not found as yet. It would therefore be illogical to make an apodictic statement today about the technology and infrastructure in 30 years' time.

tec.news: How quickly will it be possible to realise CO2-free production? What are the specific goals?

Holger Lösch: Companies have to ask themselves many questions about their Scope 1, 2 and 3. It must be assumed that CO2 prices will trend upwards and that the requirements of investors and banks regarding the transformation of the respective company and the carbon footprint of the respective products will increase. But beyond the climate-neutral transformation, companies also need to think about their strategic plans, future markets and technological development courses. There are many factors that play a role here: the availability and cost-effectiveness of CO2-neutral energy sources and raw materials, the existence of the corresponding infrastructure, but also future customer expectations and competitors' strategies. All of this needs to be weighed up when making far-reaching decisions about the future. Basically, however, it is obvious that things are simply moving too slowly at all levels.

tec.news: BDI represents the most diverse perspectives of the industrial sector. How do you reconcile the demands of these positions?

Holger Lösch: It is the task of associations to support the need to think about future developments, but also to make this fit for communication - for example through studies that look at what technology paths could look like. The associations provide impulses and work with companies to develop ideas on how political and social goals can be achieved in an economically viable way. At the same time, however, competitive capabilities must be guaranteed in all sectors. Consequently, the overall system must be sensibly balanced. Too little ambition is just as harmful as too much ambition. It's the same with employee targets: these should make demands but be achievable, otherwise frustration and resignation will ensue. For industry, this means that the transformation must be realistically feasible for all those who want it, while at the same time creating strong enough incentives for innovation and investment.

tec.news: The AES is defined by a holistic approach: sector coupling not only considers generation, but also the distribution and consumption of energy. How does industry work together with the infrastructure and energy sectors?

Holger Lösch: At BDI, we look across all sectors. Our studies on climate pathways have included all four sectors in the picture. We need to find the most efficient solutions possible in the inextricably linked sectors of energy, industry, buildings and mobility. This characterises and determines the idea of sector coupling. I still perceive great potential for development here. Similar to the circular economy, sector coupling is often extolled to the skies, but there is a lack of concrete implementation. A climate-neutral society will have to be much more circular and integrated than the linear world of today. This can also lead to conflicts of interest within industry. What counts is the willingness to communicate and dialogue so as to ultimately show politicians a way forward that develops the overall system as efficiently as possible.

tec.news: How is BDI driving sector coupling forward and what does the cooperation with other associations such as ZVEI look like?

Holger Lösch: ZVEI is one of the main member organisations of the BDI. It is a key partner for us, an important enabler for the energy transition, both in terms of direct and indirect electrification. Together as associations, we are called upon to weigh up what is ultimately in the overriding interest of industry in Germany and Europe. BDI is also occasionally called on to act as a moderator.

tec.news: How does BDI view the issues for industry worldwide?

Holger Lösch: We want to achieve the climate targets we have set - in our own country and in Europe. This means that we need opportunities and ways to make our existing industries climate-neutral in the future. The transformation should also help us to manufacture products that are seen as exemplary worldwide and that open up new markets for new technologies - and thereby new growth potential.
 

tec.news: Industry is both a provider and a user of sector coupling in the AES. In concluding, what opportunities and risks need to be considered from an industry perspective?

Holger Lösch: We need ambitious targets that are also achievable. We need protection against unequal ambitions on the global markets, because we cannot allow our competitors to continue doing the wrong things unhindered while we endeavour to do the right things.

Therefore, a major focus of policy must be on the questions: How can we make the transformation resilient and competitive? How do we create a balanced system of incentives for the billions and trillions of additional investments needed? A future new EU Commission and a possible next German government will have a very large playing field ahead of them.