NEW DIW/Bruegel study on Decarbonisation of Energy
Ahead of the EU's upcoming gas package, with colleagues from @DIW_Berlin and @Bruegel, our report for the European Parliament ITRE on the 'Decarbonisation of Energy' has just been published!
Available here: https://www.europarl.europa.eu/RegData/etudes/STUD/2021/695469/IPOL_STU(2021)695469_EN.pdf
Some key messages (Thanks to BenMcWilliams for putting those together!):?
While decarbonisation is increasingly certain, the EU's 2050 zero-carbon scenario is far from clear. A range of possibilities differ by fuel compositions, energy demand, domestic production and import shares.?
We explored 3 different extreme scenarios in which 2050 energy consumption is skewed toward (i) electrification, (ii) hydrogen, (ii) and alternative green gases, respectively. We use simple, transparent assumptions (not intended as complex modelling work!).??
Our first strong conclusion is that a range of uncertainties (learning costs, import costs, infrastructure capabilities, behavioural preferences, politics..) make determining optimal pathways almost impossible.?
Secondly, when assessing the annual costs of different scenarios, the driving factor is the assumption about import costs for different fuels in 2050 - it is very difficult to know much about these costs today.?
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Third, while direct electrification is preferable in a number of economic applications, a range of controversial applications remain. In this context, we make three further recommendations:?
1. All scenarios will require an immense build out of low-carbon electricity. Accordingly, installing too much renewable generation capacity is almost impossible.?
2. Our analysis shows that NECPs in their current form are insufficient to meet key indicators of JRC net-zero modelling. They need to be strengthened. To enable better research, they should also be made more comparable.?
In the transition, the overwhelming share of investments must come on the demand side. Clear policy signals are essential. We argue that 2021-2030 must be the decade of infrastructure investments to provide clear pathways for private investors.?
But, the report is over 100 pages so difficult to tweet! Particularly, separate chapters zoom into coal, natural gas, and hydrogen separately and, we hope, offer a useful overview of their respective situations today, as well as important decisions to be taken over the coming years.?