Kristina Govorukha

As of 2027 the EU will rely on a second Emission Trading System (ETS2) to cap emissions in the buildings, road transport and other sectors. Uncertainty about how high prices could rise and related drivers is substantial. In light of this, we explore ETS2 price paths using the energy system model PRIMES. We focus on the effect of complementary efficiency policies (EPs), as earlier research suggests they could have profound impact. Indeed, analysing three scenarios with different EPs stringency, we find that they make ETS2 prices vary between 71 EUR/t (strong EPs) and 261 EUR/t (weak EPs) in 2030. With a view on Germany, in all three scenarios similar emission reductions (-42%) are achieved, implying marginal abatement costs are at least 261 EUR/t regardless of the instrument effective at the margin. Last, we discuss the link between ETS2 and ESR targets.

In order to achieve the commonly agreed emission reduction target, the European Commission called upon the member states to submit National Energy and Climate Plans to ensure increased transparency for the respective national targets and strategies. An analysis of these plans shows that some member states have declared ambitious emission reductions targets, as well as technology-specific phaseout policies in the power sector. A transformation to a climate-friendly system requires considerable investment, the question arises if there are benefits to be in the vanguard. We find that countries may have an incentive to outperform in the development of a low-carbon electricity system.

Several European countries plan to phase out coal-fired power plants in order to reach their greenhouse gas abatement targets. Additionally, the phase-out will bring about so-called ancillary effects or co-effects. In our study, we focus on the co-effects induced in the countries that export coal to Europe. Furthermore, we examine the ancillary effects imposed on China as a major supplier of technologies (like solar energy technologies) that will replace coal-fired power plants. Using a combination of an input-output model, econometric analysis and employing the concept of the United Nations’ Sustainable Development Goals, we assess impacts of coal phase-out policies on environmental, economic, and societal dimensions. Our results show that despite negative impacts on income and employment in coal-exporting countries, a phase-out of coal-fired power plants is linked with multiple positive effects. In particular, we observe improvements in water management and biodiversity conservation, reduced release of pollutants, and improvements on a societal level. However, even if we consider a reduction in the use of coal in the European steel production sector as an additional challenge, these positive impacts on coal exporting countries remain rather small. The same applies to the effects we observe for China.

The effects of extreme weather events, such as heat waves and droughts are taken into account in both global and European policies. Accordingly, the protection of critical infrastructures and in particular, the resilience of the energy sector was the subject of intense research. There are regional differences in the degree of exposure to extreme events. In Northern Europe, their intensity has increased dramatically within a decade. In our analysis we identify emerging risks of extreme weather events, in particular, droughts and high temperatures, for the German power sector. Furthermore, we consider how European policy addressed these severe risks. Our analysis is based on extensive datasets covering temperature and drought data for the last 40 years. We find evidence of a higher frequency of power plants outages as a consequence of droughts and high temperatures. We investigate increases in the wholesale electricity price and price volatility and develop a capacity-adjusted drought index. The results are used to assess the monetary loss of power plant outages due to heatwaves and droughts. We stress that increasing frequencies of such extreme weather events will aggravate the observed problem, especially with respect to the transition of the power sector.

The effects of extreme weather events, such as heat waves and droughts, are taken into account in both global and European policies. Accordingly, the protection of critical infrastructures and in particular, the resilience of the energy sector was the subject of intense research. There are regional differences in the degree to which extreme events affect the energy sector. In Northern Europe, their intensity has increased dramatically within a decade. In our analysis, we identify emerging risks of extreme weather events, in particular, droughts and high temperatures, for the German power sector. Our analysis is based on extensive datasets comprising temperature and drought data for the last 40 years. We find evidence of a higher frequency of power plants outages as a consequence of droughts and high temperatures. We investigate increases in the wholesale electricity price and price volatility and develop a capacity-adjusted drought index. The results are used to assess the monetary loss of power plant outages due to heat waves and droughts. We stress that increasing frequencies of such extreme weather events will aggravate the observed problem, especially with respect to the transition of the power sector.