Electrification is no longer a climate issue

Electricity generation is no longer just an environmental question Europe has made significant strides toward cleaner energy over the past decade. Today, nearly half of the electricity generated comes from renewable sources such as solar, wind, and hydropower. However, even as progress seems evident, it has become clear that the most critical phase of the transition still lies ahead. According to data, electricity currently accounts for approximately 23 percent of total energy consumption within the European Union. This share has remained largely unchanged over the last ten years. The majority of energy continues to be consumed in transport, heating, and industry, sectors where fossil fuels such as oil and natural gas still dominate. In other words, Europe has succeeded in producing increasing amounts of clean electricity, but it has yet to begin using it effectively where energy demand is highest. Arthur Vašarević, director of Schneider Electric for the Western Balkans region, emphasizes that the real challenge begins once renewable energy production increases. “Often we think the work is done when we increase the share of renewable energy sources,” he says. “In reality, that’s when the most important part starts, the use of electrical energy where we still rely on oil and natural gas today. This means more electric vehicles, more heat pumps for home heating, and more electricity in manufacturing.” He adds, “Ten years ago, the main question was how to produce more clean electricity. Today, the question is how to deliver this electricity to cars, factories, commercial buildings, and homes. It is precisely here that the success of the energy transition becomes visible.” The implications extend far beyond environmental concerns. Electrification is also a crucial economic issue. Europe currently imports around 60 percent of its energy, which means vast sums of money flow out of the continent annually. If more energy were used in the form of electricity produced domestically from renewable sources, less oil and natural gas would need to be imported, leading to greater investment in local infrastructure and keeping more capital within the European economy. Estimates suggest that accelerated electrification could reduce annual costs of importing fossil fuels by approximately 250 billion euros by 2040. Vašarević explains, “Every time we replace oil or natural gas with electricity produced in Europe, money stays within the European economy. This means more investments, more jobs, and greater resilience against global disruptions.” He concludes, “Electrification is no longer just an energy policy. It is becoming an industrial and economic policy for Europe.” For countries in the Western Balkans, this represents a unique opportunity to modernize their economies faster than previously possible. “Our region has a great advantage,” Vašarević notes. “It does not have to repeat the path taken by more developed European countries. We can immediately invest in smart grids, industrial digitization, and electric mobility. This is one of the biggest developmental opportunities of this decade.” The effectiveness of electrification is rooted in physics rather than politics. For example, internal combustion engines convert only 20 to 30 percent of the energy from fuel into useful work, with the rest lost primarily as heat. In contrast, electric motors utilize approximately 90 percent of the energy they receive. Similarly, heat pumps can generate three to four units of thermal energy from one unit of electrical energy, making them significantly more efficient than traditional heating systems. Vašarević points out, “When an electric motor uses almost all the received energy while a conventional engine loses most of it as heat, it is difficult to find a reasonable argument against electrification.” He adds, “People often think that electrification is merely a technological shift, but it is much more than that, it is a transformation of entire industries and economies.”