Socioeconomic and socio-political Scenarios shaping the European Hydrogen Economy of 2040

This is the central question in our scenario process with our expert group and guests. In the current phase, we are developing the socioeconomic/-political scenarios that will significantly impact what a European energy system based on abundant hydrogen could look like. In a series of interviews at the beginning of the scenario process, we identified the following six key factors: (1) Global Power Constellations; (2) European Integration and Cohesion; (3) The Degree of Autonomy and Self-Sufficiency in Europe; (4) The Focus of European and Global Policy; (5) The Values, Preferences, and Sustainability of Lifestyles; and (6) the Organisation of Energy Systems. Currently, we are exploring in more detail how these factors can shape the energy system:

• Where does the (primary) renewable energy come from? Is it produced within Europe? Does it come from imports? Or is it a mix of both imports and production?

• How is hydrogen transported to and within Europe?

• Is hydrogen produced more centrally and then transported? Or mostly decentral? Are there differences between cities and rural areas?

• How much industrial production will be taking place in Europe, and how concentrated will it be regionally?

• What are the end uses of hydrogen? Furthermore, how much hydrogen is needed?

For example, one can easily imagine that hydrogen production needs to happen in Europe if the trade is restricted due to conflicts. Consequently, the question is how much energy is available (and needed) in such a Europe. The answer to this question depends on the energy consumption of the industry, transport, and households and the rate of investments in renewable energy infrastructure. Energy sufficiency, in this case, might very well be a political decision.

The following paragraphs present the socioeconomic/-political scenarios that the experts have developed. The possible configurations of an energy system for each scenario will be presented in a subsequent report. Some presented future developments are more likely than others, some are already visible today, and some are preferable. In total, we cannot predict or forecast the exact future. We can explore various potential futures to find the correct answers to support the developments we want to see in the future and prevent those that we consider undesirable.

Overview of the resulting scenarios

Based on a morphological analysis with a consistency check, we identified four specific scenarios:

I The United States of Europe

Ia Primacy of sustainability – circularity with high tech

The world took climate change seriously. The United Nations are recognised as a sort of world government. The Common Foreign and Security Policy (CFSP) of the European Union is extended to nearly all policy domains and strengthened on all levels (legislation, executive/law enforcement, jurisdiction on central, regional and national levels). National governments have transferred power to the European level and their regions. European nations amongst themselves cooperate politically and economically in a very integrated way. The former primacy of “economic development and growth” has now turned into “sustainability and circular economy”. As a result, some large transnational companies focused on industrial production struggled and went bankrupt because investing in environmentally friendly production was too expensive. This consolidation of industrial production has led to a reorientation of markets towards digital services, recycling industries, and technological innovation, including research on new materials and furthering efficiency. Material cycles are mostly closed, and the material turnover is strongly reduced. Consequently, the input of new raw materials is barely necessary. Europe is widely autonomous and self-sufficient both in terms of materials and energy. While global trade is possible, import and export rates are relatively low.

Ib-Forced sustainability – circularity based on frugality

The former bipolarity between East and West does not exist any more. Western dominance declined due to internal conflicts within the United States. Russia and China have allied. New power centres emerged around India, Brazil, South Africa, and the US is trying to regain influence. This reconfiguration provoked ever-returning conflicts in various regions of the world. Global trade is limited as a result of conflict and terror. European countries moved closer together and strengthened the European Commission as a European government that takes care of common security, foreign affairs and sustainability policy. European nations are focussing on a single European market. Means of a circular economy – recycling, reusing, reducing, refurbishing, refusing, etc. – are widely applied to most of the sufficiently abundant resources in Europe that impact the well-being of its citizens. Local orientation, appropriate and affordable technologies, and intra-European trade play a key role in the well-being and content of society's living. This shift in orientation implied the adaptation of certain societal habits (travelling less, changing consumption patterns, eating more local/regional food, etc.) leading to a “purpose-economy”. The means of the Green Deal are the guiding principle of European regulation and politics. Only that the focus is not on economic integration but on the social and environmental dimensions of sustainability as formulated in the Green Deal. The economy is oriented towards an efficient exchange of goods and services, as opposed to (financial) growth. Europe is mainly autonomous and based on a renewable energy system. Emissions trading and carbon border adjustment mechanisms combined with other due diligence mechanisms underpin the focus of environmentally friendly and climate-protective economic activities.

II Economisation – Primacy of the Price

A privatised world

Large multinational companies dominate the world. They have their security and supervision installations and even private military services. As they have more financial power at their disposal than some single nations, they have large lobbying capacities and a remarkable influence on political decisions. A significant share of infrastructure and terrain is privatised, causing citizens, other (smaller) companies, and partly states to be highly dependent on large companies. The European Union as we know it today does not exist any more. Most European countries have negotiated bilateral agreements to assure trade and secure peace. The EU Commission still exists in a consolidated form in the function of an advisory council – comparable to the United Nations. Global markets are highly efficient, and global agreements between multinational companies assure perfect global distribution of raw materials and goods. The whole economy follows the principle of efficiency and cost-effectiveness. The multinational companies recognised environmental threats and “no action” prices early. Therefore, high environmental standards were implemented quickly because the negotiation and legislation processes are lengthy. The level of pollution decreased significantly worldwide. Societies’ values are oriented towards material status and consumption. Nonetheless, the private company-owned leasing and renting systems enable sustainable and affordable solutions for society, ensuring high living standards.

III Green Deal for Europe

A western led world

The US and the Western countries (G7) remain the global economic and technological leaders. China and Russia seek to cooperate, and multiple agreements are in place to ensure that conflicts remain few. Trade with China and Russia is restricted, creating shortages of certain raw materials. The policy of the EU Commission is ambitious, setting far-reaching goals for various political themes. The priorities are environmental and climate policy. Nonetheless, the administrative apparatus is large and slow in decision-making. The interests of various countries vary significantly. Despite that, Europe is internationally strong, and its policies are effective. Europe is technologically advanced and applies recycling as well as other circular economy means, like reusing and refurbishing techniques. The economy is strongly based on research and innovation, and technology transfer, enabling a circular economy on a global scale. High-tech, constant innovations, new materials and digitalisation help achieve energy and material efficiency, relieving the pressure on the environment and supporting healthy lifestyles. European policy is focused on the European single market. Emissions trading and carbon border adjustment mechanisms combined with other due diligence mechanisms underpin the focus of Europe's environmentally friendly and climate-protective economic activities. These mechanisms, together with global technology transfer, assure global trade.

Links to other articles and the documentation of the process:

• Key factor catalogue

• https://www.futures4europe.eu/post/hydrogen-economy-in-europe-2040

• https://www.futures4europe.eu/post/scenarios-of-a-hydrogen-economy-2040

• https://www.futures4europe.eu/post/green-hydrogen-global-hydrogen-justice-just-energy-transition-for-all

• https://www.futures4europe.eu/post/global-race-on-hydrogen