Tightening the EU Emissions Trading System (EU ETS) under the EU’s Green Deal would significantly accelerate the decarbonization of the European electricity sector – and likely lead to the demise of the coal industry. In a new study, a team of researchers from Potsdam, Germany, quantified the substantial changes that the European electricity system is about to undergo when the EU’s new climate target is implemented. Higher carbon prices, the authors show, are not only an inevitable step in reducing emissions – they will also lead to a cheap electricity system powered by renewables much faster.
“Once the EU translates its recently adjusted emission reduction target of at least 55% in 2030 compared to 1990 into tighter EU ETS ceilings, the electricity sector will experience fundamental changes surprisingly soon”, says Robert Pietzcker of the Potsdam-Institute for Climate Impact Research (PIK), one of the lead authors. “In our computer simulations of the new ambitious targets, this would mean that renewable energies would already contribute nearly three quarters of electricity production in 2030 and that we would achieve zero emissions in the electricity sector by 2040. Once the change initiated, it can gain speed in an unprecedented way. “
To determine the impacts, economists studied variations in emission reduction targets, increased demand for electricity, which could result from sector coupling, and investments in the construction of transmission grid infrastructure. efficient to better pool renewable resources in European countries. They also analyzed the effect of the potential unavailability of new nuclear deployment and carbon capture and storage (CCS) plants designed to reduce the amount of CO emissions of human origin.2. Remarkably, neither nuclear power nor fossil fuel-CCS power plants have been shown to be relevant in achieving emission reduction in computer simulations.
Phasing out coal by 2030, gas-based production greatly reduced
“All things considered, the 55% target will have massive consequences for the electricity sector,” says Sebastian Osorio of PIK, another lead author. “Under the EU’s previous climate mitigation target – which meant reducing greenhouse gas emissions by 2030 by just 40% – it was expected that the price of carbon in EU emissions trading system reaches 35 € per tonne of CO2 until 2030. However, by adhering to the new target of minus 55%, carbon prices in the ETS would in fact be more than tripled to reach around € 130 per tonne of CO.2 by 2030. That would be the end of coal-fired electricity as we know it – a meager 17 terrawatt hours in 2030, 2% of what it was in 2015. “
“Contrary to what has been observed in recent years, the disappearance of coal will not lead to greater production from gas in the future,” adds Robert Pietzcker. “With CO2– prices above € 100 per tonne of CO2, we predict that electricity production from gas will fall to less than 40% of its 2015 value by 2030 and to less than 4% in 2045. Plans to build new combined cycle gas-fired power plants in some EU member states give the impression of stepping back in time to 2005, when utilities planned new coal-fired power plants despite the EU-ETS, creating billions of stranded assets that will never reimburse their investment costs. The only new constructions likely to recover their investment costs are the power stations equipped with turbines which can switch to high shares of hydrogen. “
Seasonal hydrogen storage, combined with better interconnection between EU Member States and the deployment of batteries, will allow a stable operation of a clean energy system based almost exclusively on renewable sources.
Electricity prices will increase but return to current levels until 2050
This is not only good news for stabilizing our climate, but also for industry and end users, as these changes will be accompanied by minor price increases. “Shutting down fossil power plants before the end of their lifespan and scaling up wind and solar power earlier in this decade will temporarily raise prices,” says co-author Renato Rodrigues by PIK. “But after 2025, costs will fall again due to greater availability of cheap wind and solar power, ultimately bringing electricity prices back to levels seen over the past decade. Thus, the EU is well advised to quickly translate the new target into a stricter ETS. ceilings to ensure an affordable and sustainable transformation of our electricity system. “
Source of the story:
Material provided by Potsdam Climate Impact Research Institute (PIK). Note: Content can be changed for style and length.