Adverse effects of rising interest rates on sustainable energy transitions

Increasing the use of renewable energy (RE) is a key enabler of sustainable energy transitions. While the costs of RE have substantially declined in the past, here we show that rising interest rates (IRs) can reverse the trend of decreasing RE costs, particularly in Europe with its historically low IRs. In Germany, IRs recovering to pre-financial crisis levels in 5 years could add 11% and 25% to the levelized cost of electricity for solar photovoltaics and onshore wind, respectively, with financing costs accounting for about one-third of total levelized cost of electricity. As fossil-fuel-based electricity costs are much less and potentially even negatively affected by rising IRs, the viability of RE investments would be markedly deteriorated. On the basis of these findings, we argue that rising IRs could jeopardize the sustainable energy transition and we propose a self-adjusting thermostatic policy strategy to safeguard against rising IRs.

Written by Tobias S. Schmidt, Bjarne Steffen, Florian Egli, Michael Pahle, Oliver Tietjen & Ottmar Edenhofer

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Technological frames and the politics of automated electric Light Rail Rapid Transit in Poland and the United Kingdom

Light Rapid Transit (LRT) systems are often backed not only because they satisfy basic mobility functions, but because they can revitalize urban centers, affirm the legitimacy of state planners, support innovation and even cultivate an image of a city or region as progressive and modern. In this study, we argue that electrified, automated LRT systems can fulfill private functional frames, private symbolic frames, societal functional frames, and societal symbolic frames. In particular, we argue that light rail can fulfill private functional frames (making passengers feel safe, offering a cheap and efficient mode of transport), private symbolic frames (signifying political identity or exclusionary planning), societal functional frames (environmental stewardship), and societal symbolic frames (such as modernism or innovativeness, or the lack of it). Essentially, these frames encompass not only what light rail is and does, but what it means and represents, and even some of its failures and challenges. The article then identifies ten specific frames associated with two case studies of automated light rail systems, the established Docklands Light Rail (DLR) in the United Kingdom, and the emerging Personal Rapid Transit (PRT) in Poland. We find that the DLR is not only a vital part of meeting (functional) demand for mobility, it is innovative and exciting to ride, legitimation of a conservative approach to project development, a social injustice (to some), an environmentally friendly alternative to cars, and a perceived magnet for global investment into the greater Docklands area. Similarly, the PRT is not only a reliable and safe mode of transit, but also a technical marvel, a monopoly breaking symbol, a clean and sustainable form of mobility, and a reflection of either progressive Polish innovation and entrepreneurship, or enduring failure.

Written by Benjamin K. Sovacool and Asieh Haieri Yazdi

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Climate policies and skill-biased employment dynamics: Evidence from EU countries

The political acceptability of climate policies is undermined by job-killing arguments, especially for the least-skilled workers. However, evidence of the distributional impacts for different workers remains scant. We examine the associations between climate policies, proxied by energy prices, and workforce skills for 14 European countries and 15 industrial sectors over the period 1995–2011. Using a shift-share instrumental variable estimator and controlling for the influence of automation and globalization, we find that climate policies have been skill biased against manual workers and have favoured technicians. The long-term change in energy prices accounted for between 9.2% and 17.5% (resp. 4.2% and 8.0%) of the increase (resp. decrease) in the share of technicians (resp. manual workers).

Written by Giovanni Marin and Francesco Vona

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INNOPATHS holds a workshop for European policymakers

How might Europe achieve deep decarbonisation? The INNOPATHS project is using a process of stakeholder engagement and co-design to develop decarbonisation pathways for Europe to 2050 – each of which explores a different route to deep decarbonisation. On Tuesday 9th July the project brought together policymakers from across Europe to think through how decarbonisation

Will incumbent industries and infrastructures (like gas networks) play a big role in shaping technology choices, or will upstart newcomers disrupt and reshape the business landscape for energy? Will populist movements cause some countries to fall behind, while others press ahead towards net-zero, leading to a Europe with “two speeds” of decarbonisation? How might a “circular” or “sharing” economy change patterns of energy demand?  These are important issues for long-term energy strategy, and are explored through the narrative scenarios being developed within the INNOPATHS project. Each narrative highlights knowledge gaps, where more research might help, and each one highlights challenges for policymakers.

The workshop discussions helped the INNOPATHS team to further develop the narrative scenarios. The key aspects of these narratives will then be quantified using the project’s suite of integrated assessment and energy modelling tools, and then made available to explore via an interactive decarbonisation simulator. The final narratives—and associated modelling—will be completed in March 2020. Watch this space!

Low-carbon transition in European carbon-intensive regions: mission impossible or indispensability?

The role of carbon-intensive regions in the EU

Coal production has been in decline in the EU in recent years; production decreased by over 30% between 2000 and 2015. However, unlike renewables, solid fossil fuel production is not evenly distributed on the continent. Coal is mined in more than 40 EU regions across 12 Member States and it is burnt in over 200 power plants. Approximately a quarter of a million Europeans are directly employed in the coal mining and coal power sector. In terms of employment, Silesia – located in southern Poland – is the largest coal-based region in the EU.

The coal path of Silesia – widening the road or striving for a cul-de-sac

Poland is the largest European coal-based economy with hard coal being the main energy resource, although its share has been decreasing. The latest governmental draft on “Energy Policy for Poland till 2040” assumes a 60% share of coal in the energy mix in 2040 as well as an increase in energy generation from offshore wind farms and the replacement of lignite by nuclear energy after 2030. It is crystal clear that in the next two decades, coal will still be a major source of energy although its consumption by the power sector is to decline by nearly 20%. For years, Silesia has been the region with the second highest contribution to the national GDP, exceeded only by the Masovia Voivodeship with Warsaw – the capital city of Poland. Nevertheless, the importance of Silesia for the Polish economy has been gradually decreasing. Similar to other carbon-intensive regions, a low-carbon transition entails more risks than opportunities according to regional stakeholders. Limited technical potential to deploy renewable power plants, poor air quality, regional dependence on traditional industries as well as limited financial resources pose significant challenges to the low-carbon transition in this Polish region. Let us not forget big politics behind the screen and politicians who have always played a key role in favouring or depreciating Polish mining and to whom coal is alternatively ‘black gold’, or ‘not everything that glitters is gold’. At present, Polish authorities seem to be a guardian angel of Polish coal as they perceive it as a natural and strategic resource and a guarantor of the Polish national interest. Perhaps, it is only a political gambit to hush down Polish miners’ discontent and their worrying about losing employment or benefits (after all promises to keep Polish mining safe and sound were made in 2015 during the election campaign). Yet, isn’t it a bit symptomatic that the Polish President stated adamantly that he will not allow the decline (actually, he used the verb “murder”) of Polish mining, and this statement is being made at the very same time COP24 in Katowice is being held?

So is a low-carbon transition of carbon-intensive regions feasible?

At first glance, the answer to the above question is affirmative, but it will take time to make it happen. From the very beginning reforms in the energy sector should be an essential part of a sustainable transition of coal-dependent regions where the costs may be high, especially in the short-term perspective. The reforms must be wide-ranging, based on a left-to-right political consensus and not biased against the coal sector. To have success in this bold and long-awaited endeavour, the future energy mix and corresponding technologies should be carefully designed, matched and should remain stable in the long-term. At the same time, the right incentives for the energy transition should be clear and acceptable for all stakeholders.

Looking at the future (because there must be one…)

The multi-stakeholder approach is widely promoted by the Paris Agreement and the European Union. The implementation of this policy line is supported by numerous international measures aimed at helping the countries to meet their obligations. These include mainly financing instruments targeted at the activities streamlining the low-carbon transition and the ones to relieve financial barriers of the process and to bring benefits to the society. According to the European Commission, the transition to clean energy in the European Union will require €177 billion in additional investment per year from 2021 onwards. If the right investments are not stimulated now, there is a risk of locked-in high-carbon infrastructure and stranded assets. Moreover, the cost of delaying this transition may be much higher that the costs of the transition itself.

How to step this path to success?

The path to success in the field of decarbonizing European regions deeply laced with coal seems to be bumpy with all its uncertainties and question marks, with dos and don’ts, with negotiations and settlements. The experience and mistakes made by many countries have proved that the energy mix and the technological transition should be designed and implemented on the basis of transparent and well-thought-out schemes and it should remain stable for long time. It is crucial to gain the willingness of the whole coal-based industry to actively participate in the transition with a prerequisite for success being a full political and social consensus over a coal-based regional transition. However, no matter how painful or backbreaking the process turns out to be, we owe this to young and future generations, to people like 16-year old Greta Thunberg, a worldwide known Swedish activist, who in one of her thought-provoking speeches on climate change and the detrimental influence of coal to the environment states that we (“we” read as adults, policy-makers, lobbyists, governments) are stealing our children’s future in front of these children’s eyes and it is a crisis which, if unsolvable on the basis of the existing system, should be managed and overcome by new rules embedded in a new system. Don’t we see that Greta has just thrown down a gauntlet? Should we feel chided or embarrassed by this young and climate-conscious person? The former may not be Greta’s intention but the latter for us to feel is definitely right. Once our cheeks lose the redness of embarrassment, we should stand up, pick up the gauntlet and act. Perhaps, no one will feel like a thief any more.

Halving energy demand from buildings: The impact of low consumption practices

Limiting global warming below 1.5 °C requires rapid decarbonization of energy systems. Reductions of energy demand have an important role to play in a sustainable energy transition. Here we explore the extent to which the emergence of low energy consuming practices, encompassing new behaviors and the adoption of more efficient technologies, could contribute to lowering energy demand and thereby to reducing CO2 emissions.

To this end, we design three detailed energy consumption profiles which could be adopted by individuals in current and future wealthy regions. To what extent does the setting of air conditioners to higher temperatures or the widespread use of efficient showerheads reduce the aggregate energy demand? We investigate the potential of new practices at the global level for 2050 and 2100.

The adoption of new, energy saving practices could reduce global energy demand from buildings by up to 47% in 2050 and 61% in 2100 compared to a scenario following current trends. This strong reduction is primarily accounted for by changes in hot water usage, insulation of buildings and consumer choices in air conditioners and heat pumps. New behaviors and efficient technologies could make a significant long-term contribution to reducing buildings’ energy demand, and thus facilitate the achieval of stringent climate change mitigation targets while limiting the adverse sustainability impacts from the energy supply system.

Written by Antoine Levesque, Robert C. Pietzcker and Gunnar Luderer

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No simple answer to carbon complexity

“These are the times that try men’s soul” wrote Thomas Paine in his famous pamphlet American Crisis in the heat of the American Revolution. These words well describe the present time too – in their broadest meaning. The political systems in the western world are under unprecedented pressure not witnessed since the dark times of the 1930’s.

But we also see the raise of a quite new kind of awareness among people and businesses on climate change. The public discourse on emissions has jumped to another level compared to just a few years ago. Our leaders are being challenged to move from just talking about the issue, to undertaking stronger measures to cut carbon emissions quickly.

At the same time, bottom-up popular movements are entering the political arena reflecting our political systems’ inability to adequately reflect on timely issues. However, they also reflect the failure of our politicians to equip the people with the tools and skills required to handle with wicked problems such as climate change.

The climate change movement is obviously getting stronger in several member states of the EU, and also resonated in the recent European Parliament elections. It may, however, still be too early to claim a coming leapfrog in climate policies due to the shifting political landscape in Europe, though all scientific evidence univocally speaks for its urgency.

But let’s make a ‘gedankenexperiment’ by assuming that in spite of all the uncertainties, Europe would soon make a shift towards a stricter climate policy. Instruments for emission cuts are in place (e.g. the price of emission allowances in ETS could be better regulated, among others). Scenario tools such as those used in the Horizon 2020 INNOPATHS project can help to construct least-cost technology trajectories to reach a zero-carbon energy sector in Europe. From a techno-economic point-of-view, we could well find a feasible deep decarbonization solution for Europe.

But would society be prepared for such a quick energy transition?  Deep decarbonization equates in practice to a huge technology disruption similar to the industrial revolution. It goes beyond the techno-economic realm. It involves profound social issues. It is essentially a social-technical transition in which institutions and business models supporting present technologies need to be changed to enable adoption of new clean technologies and practices.

Consumers also need to adapt and engage in new ways. How to deal with distributional effects? A change involves winners and losers. For example, a high carbon tax may sound like a perfect tool for cutting emissions as it forces those who pollute to pay and it could motivate the polluters to change their behaviours. But from a justice point of view, it could also legitimize those who can afford to pay to pollute (even more) and not to change their lifestyles, whereas those who cannot pay or afford non-polluting solutions, could face large challenges in their everyday lives. A just climate legislation would therefore strive for measures which treat each of us equally in relation to our capabilities.

There are multiple ways to frame the energy and climate problem1. Importantly, the way we frame it would also prioritize the values and factors against which we make our decisions, which in turn will shape the solutions. Personally, I would prefer to see the more fundamental factors being prioritized in any type of climate framing, namely the Science (laws of nature), the Planet (planetary boundaries), and the Ethics (universal values).

Though a lot of research has already been done on policy and social dimensions, also within the INNOPATHS project, the complexity of the issues involved is so profound that this would call for much stronger efforts for this area of research in the coming Horizon Europe R&D programme.

Thomas Paine ended his pamphlet with the words “…the harder the conflict, the more glorious the triumph”. For me his inspirational words sound in today’s terms more like where there’s a will, there’s a way – also in the quest of solving the carbon question.

1 Sun-Jin Yun, John Byrne, Lucy Baker, Patrick Bond, Goetz Kaufmann, Hans-Jochen Luhmann, Peter Lund, Joan Martinez-Alier, and Fuqiang Yang. 2018. Energy and Climate Change. In: Rethinking Environmentalism: Linking Justice, Sustainability, and Diversity, ed. S. Lele, E. S. Brondizio, J. Byrne, G. M. Mace, and J. Martinez-Alier. Strüngmann Forum Reports, vol. 23, J. Lupp, series editor. Cambridge, MA: MIT Press, 2018 ISBN 9780262038966.

Assessing the impacts of setting CO2 emission targets on truck manufacturers: A model implementation and application for the EU

The European Commission introduced in 2018, for the first time, CO2emission standards for truck manufacturers, to incite additional reduction in the road transport CO2 emissions; trucks represent the second major contributor to CO2 emissions in the EU road transport. This paper presents a model based analysis which simulates the implementation of such targets in an energy economic framework and assesses the impacts of such standards using the PRIMES-TREMOVE model. We implement the CO2 emission standards on truck manufacturers as CO2 emission constraints on the new vehicle choice module. The proposed method is formulated as a mixed complementarity problem. The analysis reveals a reduction in road transport CO2 emissions and diesel consumption as a result of an uptake of more efficient truck technologies. In particular, LNG trucks are favored because of the lower emission factor of natural gas relative to that of diesel. Implementing progressively ambitious CO2 standards renders diesel trucks more expensive as their energy efficiency potential reaches its technical limit.

Written by Pelopidas and Yannis Moysoglou

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INNOPATHS holds Stakeholder Event: “Towards carbon neutrality, the perspective of investors”

On the 15th of May 2019, INNOPATHS held a large stakeholder event hosted by E3-Modelling in Athens, designed to examine the investment opportunities emerging from the transition towards a low- or zero-carbon economy.

The INNOPATHS project aims to understand the challenges of decarbonisation and the innovation needed to address them and present a detailed assessment of low-carbon technologies, their uncertainties, future prospects and system characteristics. The project also aims at creating new, co-designed deep decarbonisation pathways with novel policy and innovation processes and it puts emphasis on the societal, economic and environmental dimensions of the low-carbon transition and how they can be managed.

The project was presented by Professor Laura Diaz Anadon (University of Cambridge), Elena Verdolini (Senior Scientist, CMCC) and Professor Paul Ekins (UCL, INNOPATHS coordinator). The INNOPATHS online tools were presented in the conference; in particular the “Technology Matrix” tool which includes historic and projected characteristics, and associated uncertainty, of key low-carbon technologies and can be utilized to calculate the future costs of low carbon transition, and the “Policy Evaluation Tool” which presents key evidence-based characteristics of policy instruments and mixes to encourage the low-carbon transition. Professor Ekins presented the key findings of the High Level Panel on Decarbonisation pathways that proposes priority research to achieve deep decarbonisation in all economic sectors. He also pointed out the major innovative approaches of the INNOPATHS project. Professor Pantelis Capros (NTUA) presented the model-based analysis on EU low-emission pathways that fed into the European Commission strategy “A Clean Planet for all”. He showed that deep decarbonisation of the EU energy and economic system can be achieved through the upscaling of “no-regret” options (including renewable energy, energy efficiency, advanced biofuels, electrification of mobility) but it will also require the introduction of disruptive technologies, energy carriers and business models (including hydrogen, power-to-gas, power-to-liquids, use and storage of CO2, circular economy).

Professor Laura Diaz Anadon and Dr Elena Verdolini

In the second session of the conference, chaired by IENE’s head of Energy Efficiency committee, Costas Theofylaktos, a number of Greek energy market experts and company executives participated in a round table discussion on the current and future challenges of the energy sector. There, Mr. Polymenopoulos representing HELESCO highlighted the role of ESCOs in the improvement of energy efficiency of buildings. Mr. Polychroniou representing “DEPA, gas industry and renewable gas” analyzed the prospects of decarbonised and renewable gas in the deep decarbonisation context. Mr. Papastamatiou representing “ENTEKA wind energy”, one of Greece’s pioneering wind companies, addressed the licensing boundaries in RES projects noting the low success rate of wind projects, which affects indirectly electricity prices for consumers. He referred to the key market requirements for the acceleration of the energy transition, notably the development of coherent policies, the implementation of large-scale RES projects, the capacity increase of local and international interconnections and development of large-scale storage systems. Dr. Sotiris Kapellos, representing HELPE Renewables, and HELAPCO, the Hellenic Association of Photovoltaic Companies, addressed the issue of PV investments in Greece and called for the simplification of licensing procedures and a full implementation of EU guidelines for electricity market liberalization (Target model, Balancing of RES etc.). Dr. George Ayeridis (CRES, Electromobility) presented the prospects of electrification in the transport sector with high EV deployment combined with RES-based electricity. He also stated that EVs should be seen both as a market product and as a key part of the energy transition.

Modelling the EU’s Long-Term Strategy towards a carbon-neutral energy system

The COP21 UNFCCC conference in Paris in December 2015 flagged a new era for energy and climate policy. Climate change mitigation turned from being the wish of a few, to the reality of almost all nations around the globe. The signed agreement has invited all parties to submit, by 2020, mid-century low-emission strategies compatible with the goal of limiting the rise in average global temperatures to well below 2oC above pre-industrial levels and pursuing efforts to limit it to 1.5oC.

The aim of a low carbon economy has been on the EU policy agenda since the release of its “Low carbon economy roadmap” in 2011 that introduced an 80% GHG emission reduction target for the year 2050 relative to 1990 levels. However, pursuing the 1.5oC temperature increase limit requires boosting even more the ambitious climate target and aiming at a carbon-neutral economy by mid-century. Given the new climate policy regime, the discussions around low, zero, or even negative carbon policy options have been intensified in the years following the Paris milestone; new quantitative analysis, in the form of detailed policy scenarios, strategies and quantitative pathways, is necessary to assist EU policy makers in assessing the available options from both a technological and economic perspective, while also considering societal and governance issues. Many research discussions, debates and synergies in the modelling communities, have been triggered after the COP21 conference, as new innovative concepts need to be introduced and enrich existing modelling frameworks, in order for the latter to be able to perform the appropriate deep decarbonisation scenarios and provide sound input to impact assessment studies.

Certain key policy elements and technologies are considered pillars of the low-carbon transition and are treated as “no-regret” options in all recent EU climate and energy policy discussions. Such policy options are the strong electrification of final energy demand sectors, accelerated energy efficiency mainly via the renovation of the existing buildings’ stock, advanced appliances, heat recovery in the industrial sector and intelligent transportation, and the strong push of variable renewable energy sources (RES) in the power system. From a modelling point of view, their assessment is well established in the literature, and does not pose any considerable, unpresented difficulties. However, the modelling of disruptive technologies and policy instruments that could be proven essential for the transition towards a carbon-neutral EU economy (a case that requires GHG emission reductions beyond the 80% target) is far from being considered as mature in the existing literature or academic research. Modelling a power sector with renewables above 80% is a challenge as it requires representing variability in some detail along with the various balancing resources including cross-border trade. Modelling strong energy efficiency in buildings implies representing the decision of individuals about renovating the buildings deeply; this is also a challenging modelling task give the large variety of building cases and idiosyncrasies of the individuals in decision making. Electrifying heat and mobility in market segments where this is cost-efficient is among the no-regrets option. Modelling the pace of transition and the role of policy drivers from internal combustion engines to electric cars and from boilers to heat pumps are also challenging tasks due to the large heterogeneity of circumstances that the modelling will have to capture. So, the amplitude of the three main no-regrets options is challenging the modelling despite the significant experience accumulated so far. 

The carbon-neutrality target poses considerable additional challenges for the modelling. The no-regrets options are not sufficient to deliver carbon-neutrality by mid-century. Mobility, heating, high-temperature industrial uses and the industrial processes would emit significant amounts of CO2 by 2050 if conventional wisdom policies and measures only apply. To abate the remaining emissions in these sectors, disruptive changes are necessary, regarding the origin of primary energy and the way energy is used and distributed. The disruptive options are surrounded by high uncertainty due to the low technology readiness levels of the technologies involved. The disruptive options are antagonistic to each other because they require large funding resources to achieve industrial maturity and economies of scale of the yet immature technologies. Such concentration of resources requires long-term visibility for the investors and infrastructure investment, which both require clear strategic choices among the disruptive options.

We consider the “disruptive” options grouped in stylised categories, as shown below. The modelling has to include assumptions regarding the future evolution of costs and performance of a plethora of technologies and options for alternative sets of disruptive changes had to represent. Each stylized category of disruptive changes has its own challenges in terms of modelling considerations, as presented below:

  1. Extreme Efficiency and Circularity: The aim of the options included in this category is to push energy efficiency savings close to its maximum potential, introducing circularity aspects and further improving material efficiency in the EU economy, increasing the intelligence of the transport system, sharing of vehicles, achieving near-zero energy building stock, etc. Even though these concepts are present in the literature, introducing them in a large-scale applied modelling framework poses significant difficulties as, for instance, estimating the maximum industrial output reductions that can be realised at a sectoral level. It also required estimating the upper boundaries of the impact of behavioural and restructuring changes in the transport sector in reducing transport activity. Similarly, modelling a near-zero energy building stock involves great difficulties regarding the driving policies and the idiosyncratic behaviours of individuals. Almost all options included in this category are associated with non-linearly increasing costs, beyond a certain level of deployment that needs to be captured in the quantitative assessment. Some of the options might also create so-called “disutility” to the consumers, as they alter their behaviour to an eventually less “comfortable” patterns. Not capturing such effects, would underestimate the difficulty in the introduction of such policy options.
  1. Extreme Electrification: Strong electrification is a “no-regret” option, but extreme electrification is a relative newly established concept. This category adopts electricity as the single energy vector in all sectors in the long-term, with bioenergy complementing electricity only in sectors where full electrification is not technically feasible with currently known technologies, such as aviation and maritime. From a modelling perspective, deep electrification requires to studying the technoeconomic of innovative technological options such as full-electric long-distance road freight vehicles, electric aircrafts for short-haul flights and high temperature heat pumps. Using electricity as the only vector for the heating of buildings will broaden the seasonal demand gap between the summer and winter seasons for many regions, requiring either significant investments in power storage solutions or in power capacity that will have low utilisation. Capturing this in the modelling requires establishing electricity load patterns that differ by scenario at an appropriate time resolution.
  1. Hydrogen as a carrier: This category assumes that hydrogen production and distribution infrastructure will develop allowing hydrogen to become a universal energy commodity, covering all end-uses including transport and high-temperature industrial uses. Hydrogen can also provide a versatile electricity storage service with daily up to seasonal storage cycles. Hydrogen is assumed to replace distributed gas after an extensive overhaul of the pipeline system and gas storage facilities. From a modelling perspective it requires identifying the industrial processes that can be decarbonised using hydrogen-based solutions (and the relative boundary conditions), assessing the techno-economics of a variety of carbon-free hydrogen production facilities (for both blue and green hydrogen) and the costs associated with the upgrade of the gas distribution and storage system. All the above, should be established in a modelling framework that is available to co-optimise the operation of the power system and the hydrogen production facilities, enhancing in this way energy storage and coupling various sectors of the energy system and the economy.
  1. GHG-neutral hydrocarbons (liquid and gaseous): In this case, the paradigm of using and distributing energy commodities, along with the respective infrastructure, is maintained. The nature and origin of the hydrocarbon molecules is modified in order to ensure carbon neutrality from a lifecycle emissions perspective, using synthetic molecules rather than fossil ones. The production of synthetic methane and liquid fuels requires carbon-free hydrogen production and an appropriate carbon dioxide (CO2) feedstock source. The last element hints at the emergence of CO2 as a commodity, therefore it is important that energy-economy models are modified in order to treat CO2 not only as a by-product of fossil fuel combustion, as it was done till recently, but as a product that can be used for different purposes (e.g. apart from producing GHG-neutral fuels, creating carbon sinks and inducing net negative emissions via embodying it in materials or storing it underground). The origin of CO2 can either “from air” via using Direct Air Capture (DAC) technologies or by biogenic sources; both of them have uncertainties related to its learning potential and maximum availability potential, respectively. For the production of hydrogen, similar modelling considerations as in the previous case apply. A model able to represent effectively this strategy should have a rich technology database that explicitly includes the major pathways for the production of synthetic fuels; in turn populating such a database is a difficult and time-consuming exercise given the uncertainty regarding the learning potential of the various technologies. Ideally, a model should be in a position to optimise of the location of clean-fuel production facilities in Europe or elsewhere, as it is more likely that such commodities will be traded extensively.

The analytical assessment, which has provided input to the “Clean Planet for All” strategy by the European Commission in November 2018, has confirmed that a carbon-neutral EU economy by mid-century (2050) is viable both from a technological but also an economic perspective, should a number of key technologies evolve as anticipated. The analysis should be perceived as the first step of a complex assessment procedure to bolster the decision-making process regarding the definition of the EU’s long term energy and climate strategy.

Next steps should focus on the assessment of several uncertainties associated with the various pathways studied. For instance, emphasis should be given to identifying the appropriate policy instruments that could be used to materialise the emergence of technologies and energy carriers as long-term visibility of future markets is crucial for their deployment. The characteristics and costs of several disruptive technologies are also worthy of further research with emphasis on the potential of learning and economies of scale. The modelling and data improvements to be realised in INNOPATHS will enhance the model representation of disruptive options and sectoral transformation, and will enable further improvement of the design of deep decarbonisation pathways.

For more information on the analytical work behind the “Clean Planet for All” communications, please click here.